Cable To Find Major Support At 1.5480

The GBP/USD pair closed the week with gains, although on Friday gave back a good chunk of them, edging down around 130 pips from its weekly high set at 1.5657. Overall, the Pound maintains a bullish tone, supported by positive macroeconomic outcomes that point for a steady economic recovery, and a soon to come rate hike, as anticipated by BOE’s officers during the past months.

Technical Analysis

The pair is trading back below the 61.8% retracement of its latest weekly decline, which stands at 1.5560, while the daily indicators have lost their upward strength and turned lower, still holding above their mid-lines, all of which suggest the decline can extend this Monday, particularly if the pair extends its decline below 1.5480, the 50% retracement of the same rally.

In short term, the 4 hours chart shows that that the Momentum indicator turned sharply lower from overbought territory and is about to cross its mid-line towards the downside, whilst the RSI indicator also turned south from overbought levels and heads lower around 53, supporting the daily perspective.

The 20 SMA heads higher around the mentioned Fibonacci support, reaffirming its strength.

UK Housing Price Index

Rightmove’s House Price Index shows the average house price hit a new national high this month amid a supply shortage. The increase of £2,550 to £294,834 is the biggest September rise in 13 years, and if property prices continue to rise at this astounding rate, property coming to the market will have a price tag of £302,484 by December.

While the family-home market soared by about 1.2pc this month, prices in the first-time-buyer sector stalled, as home buyers struggled to afford prices which have already risen by around £10,000 in the last year.

Trade Idea

Considering the overall technical and fundamental outlook, selling the pair around current levels could be a good strategy in short term. The trend however remains bullish in medium to long term, so the short term sell trade will be invalidated on a break above 1.5580.

usmanahmed7290@gmail.com'

Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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