The British pound is trading within an uptrend channel on the 4-hour chart. On Friday, it rose to the high of 1.3890 due to weak Non-Farm Payrolls data. The pair found strong resistance near 1.39 as this level is located at the top of the bullish channel.
The US nonfarm payroll report released on Friday fell far short below projections, with just 235,000 new jobs in August. This data was the impulse for GBP/USD although a few days before the market had discounted this fact with the ADP data, which were equally negative for the US dollar.
The pair has reflected the sentiment of investors who viewed the NFP report with pessimism. Due to this, we observed the GBP/USD pair rise from the 1.36 level to 1.39, around 300 pips in 10 days. This could give a sign that the British pound could make a technical correction in the coming days .
The 4-hour chart shows that the GBP/USD pair maintains an upward trend, so it is likely that there will be a downward correction towards the 1.3793 support zone. There is the 200 EMA, 21 SMA and the line of 2/8 of murray, this level is key as it represents strong support for the pair.
An additional fact is that around 1.3793 the bottom line of the bullish channel is located. If the GBP/USD pair makes a technical bounce around this level, it will be a good opportunity to buy with the targets at 1.3855 and 1.3916 (4/8).
There is strong resistance at 1.3916 with 4/8 of murray that on previous occasions has acted as a strong barrier. Therefore, a pullback towards this resistance will be a good opportunity to sell the pair with the target at 1.3793.
It is likely that in the coming days the British pound will be trading in a price range between 1.3916 and 1.3793 due to strong resistance at 4/8 and the strong support of 2/8 of murray.
You can see on the chart that the eagle indicator is showing an overbought signal. A sharp break below the 200 EMA could change the trend of the pair and it could fall to the support level of 1.3730 and 1.3671.
Support and Resistance Levels for September 06 - 07, 2021
Resistance (3) 1.3965
Resistance (2) 1.3928
Resistance (1) 1.3891
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Support (1) 1.3817
Support (2) 1.3780
Support (3) 1.3743
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Trading tip for GBP/USD for September 06 - 07, 2021
Sell if there is a pullback at 1.3916 (4/8), with take profit at 1.3855 and 1.3793, stop loss above 1.3950.
Buy if the pair rebounds at 1.3793 (2/8), with take profit at 1.3855 and 1.3916 (4/8), stop loss below 1.3757.
The material has been provided by InstaForex Company - www.instaforex.com