GBP/USD: upward trend is broken

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Current trend

After a long upward trend from March to May, the British currency reached a key resistance level of 1.3040 and entered the consolidation stage. Later, the pair began to decline as a consequence of profit taking on long positions and growing demand for the US dollar . Additional pressure on the pair was provided by political aspects, such as parliamentary elections and comments on Brexit. According to the statistical agencies, the parliamentary elections were to strengthen the position of British Prime Minister Therese May, but according to the results of the elections no party won the majority of mandates. This fact negatively affected the exchange rate of the national currency, the pair lost more than 200 points and reached the level of 1.2700. Also, on Friday, negative data on industrial production and production in the manufacturing industry of Great Britain came out.

By the beginning of the current week, the pair adjusted upwards, but failing to gain a foothold, again went down to the level of 1.2700. Now the pair is trading slightly above this mark. This week it is worth paying attention to data on key indices, the labor market and the minutes of the meeting of the Bank of England. The States will respond with data on inflation , retail sales and industrial production. In addition, special attention is drawn to the decision on the rates of the US Federal Reserve and the accompanying statement.

Support and resistance

The probability of forming a broad descending channel is great. Technical indicators support this forecast: MACD indicates a drop in the volume of long positions, while at the same time the pair went into the cloud of Ichimoku indicator, which can signal the movement in the short term to the lower boundary of the cloud ­– 1.2620. There is no doubt that the uptrend is broken, and short positions are in priority.

Support levels: 1.2700, 1.2620, 1.2560, 1.2500, 1.2365, 1.2285, 1.2210, 1.2125.

Resistance levels: 1.2755, 1.2830, 1.2910, 1.2955, 1.3040, 1.3075, 1.3130, 1.3400.

Trading tips

In this situation, it is reasonable to place pending sell orders from the key resistances of 1.2755, 1.2890 with the targets of 1.2620, 1.2500.
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