A sharp drop in GBPUSD pair, heading towards critical support level
The sellers have finally managed to take control over the GBPUSD bulls after the pair hit the major resistance level at 1.43633.Though the pair didn’t show any bearish reversal signal in the daily chart the aggressive traders made a decent profit by shorting this pair near that critical resistance level. Currently, the pair is slowly heading towards the major support level at 1.37174 and most of the trend traders will be looking for bullish price action confirmation signal to execute fresh long orders in the pair. However, the currency selling momentum of this pair is extremely high and the conservative traders are expecting strong fall towards the major support level at 1.35996.
GBPUSD daily chart analysis
Figure: GBPUSD sharply heading towards the major support level
In the above figure, you can clearly see the sellers are in full control of the market. Prior to the closing of the last trading week, the bears managed to clear the 100 day SMA ( dynamic support level, red line).The pair might find some support near the 1.37174 mark which might result in a bullish bounce. However, a daily closing of the price below that level will ultimately lead this pair towards the major support level at 1.35996.This level is very crucial for the long-term investors and any bullish price action confirmation signal will be an excellent opportunity to execute fresh long in the GBPUSD pair.
GBPUSD weekly chart analysis
Figure: GBPUSD testing major support level in the weekly chart
In the weekly chart, the pair is currently trading near a major support zone. The daily chart strong suggests we will have some false spike down below the weekly trend line support level at 1.37797.So the conservative traders are not willing to execute long orders at the current price level. A weekly closing of the price below the trend line support level will result in sharp decline which will eventually lead this pair towards 100 weekly support level at 1.31142.This level is very crucial for the leading investors and there is plenty of support candle. So breaching that support level will be very hard for the sellers. Any bullish price action confirmation signal will be an excellent opportunity to execute long orders near the 100 weekly support level.
Fundamentally the U.S dollar is not doing well in the global market but prior to the closing of the last trading week, the U.S dollar index gained a significant amount of strength after the hawkish statement from the FED officials. However, the leading economist is considering this gain as short-term impact on the global market. So this might be perfect opportunity to look for bullish reversal signal in the GBPUSD pair. On the contrary, the British economy is doing relatively well and recovered a significant amount of its loss after the Brexit event. Considering the technical and fundamental parameters of the market, it’s better to wait on the sideline and look for clear long trade setup.