On the 4-hour chart, the British pound has been moving sideways since October 19 when it found strong resistance at 1.3832. This level has become a strong barrier for the GBP/USD pair. If it consolidates below this mark, a correction could occur in the next few days.
The SMA of 21 is located at 1.3804. Since the pound is trading below this moving average, there is a probability that there could be a fall to the EMA of 200 located at 1.3700.
The eagle indicator has made a third touch in the extreme overbought zone around 95. This data can also support our strategy, and we can expect the British pound to make a correction in the next few hours or until next week. If it consolidates at the support of 4/8 murray around 1.3671, we can expect a technical rebound and a chance to buy.
On the other hand, investors appear to be convinced that the Bank of England will eventually raise interest rates from record lows before the end of this year. This data would be giving a consolidation to the GBP/USD pair. It is likely that a technical correction will give it a new upward momentum so that it could reach the 6/8 level of murray (1.3916) up to the psychological level of 1.40.
Investors also believe that the Fed would be forced to adopt a more aggressive policy response to contain inflation that is increasing every day. A cut in bond purchases is expected, which could weaken the British pound so that it may drop to the support of 2/8 murray at 1.3427.
Our forecast is bearish according to the 4-hour chart as long as the price remains below the 21 SMA with targets at 1.3700 and up to 1.3671 4/8 murray level. The eagle indicator is showing bearish signal.
Support and Resistance Levels for October 22 - 25, 2021
Resistance (3) 1.3878
Resistance (2) 1.3855
Resistance (1) 1.3821
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Support (1) 1.3764
Support (2) 1.3707
Support (3) 1.3671
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A trading tip for GBP/USD for October 22 - 25, 2021
Sell below 1.3800 (SMA 21) with take profit at 1.3764 and 1.3700 (bottom bullish channel), and stop loss above 1.3840.
The material has been provided by InstaForex Company - www.instaforex.com