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FX Analysis

Chart of the week – Bearish reaction in GBP/USD below 200-day MA ahead of Fed & BoE

Chart of the week – GBP/USD 

Bearish reaction in GBP/USD below 200-day MA ahead of Fed & BoE

Short-term technical analysis

Time stamped: 31 Oct 2021 at 12:00pm SGT (click to enlarge chart) Source: CMC Markets
  • An interesting technical observation has been detected in the GBP/USD as markets look forward to the key monetary policy decision outcomes from both the US central bank, the Fed and Bank of England (BoE) out on this week; 3 November and 4 November. Most importantly, their respective forward guidance on the trajectory path of future interest rates.
  • On last Friday, 29 October, the GBP/USD has ended the US session with a daily “Bearish Marubozu” liked candlestick pattern right under the key 200-day moving average and the medium-term descending resistance in place since 1 Jun 2021 high that has capped previous rallies.
  • This latest negative observation suggests that the recent uptrend for GBP/USD since 29 September low of 1.3412 is now in jeopardy. If the 1.3850 key medium-term pivotal resistance is not surpassed to the upside, GBP/USD may see a further potential push down towards 1.3565 and 1.3510 next in the first step (minor supports & close to the 61.8% and 76.4% Fibonacci retracement of the recent up move from 29 September 2021 low to 19 October 2021 high).
  • On the flipside, a 4-hour close above 1.3850 invalidates the short-term bearish scenario for a squeeze up towards the next resistance at 1.3930/3980 (the 29/30 July 2021 swing high area & Fibonacci retracement/expansion cluster).