Suggestion for Trade: Buy Limit at 1.6151, SL 1.6131, Target 1.6450
GBP/USD jumped more than 80 pips during London session on Wednesday after better than expected economic reports about Britain’s economy.
Major Support & Resistance Levels
At the moment of writing spot is around 1.6352 where immediate resistance is seen at 1.6464 (high of December 10, 2013) ahead of 1.6490 (trendline resistance), a break and daily close above 1.6490 may open doors for 1.6520 and 1.6600.
On Downside, cable is likely to find immediate support around 1.6350 (hourly 200 MA) ahead of 1.6257 (previous double top resistance turned support) and then 1.6150 (channel support). A break and daily close below this support area may trigger further losses up to 1.6078 and 1.5838.
There are no signs of divergence on MACD which means the ongoing bullish trend is likely to continue in near future. Relative Strength Index (RSI) is in oversold territory at hourly timeframe that suggests a correction might be in play before further upward movement. 55 MA and 100 MA are at the same point on 4-hour chart which is an alert signal for change in trend.
Earlier Britain’s claimant count change for the month of October printed better than expected reading of -36.7K. ILO Unemployment Rate (3M) for the month of October also remained better than forecast with 7.4%. Later in the US session we have some very crucial fundamental events in-line that include Fed interest rate decision, Fed decision about asset purchase program, Federal Open Market Committee (FOMC) economic projections and then Fed's monetary policy statement followed by press conference. Investors are curiously waiting for Fed’s decision about the fate of Asset Purchase Program; even a small tapering may trigger bullish movement in USD.