[Dec 21] To break or not to break? Will the GBPUSD support zone hold this time around?

Bab 1 [Dec 21] To break or not to break? Will the GBPUSD support zone hold this time around?

[Dec 21] To break or not to break? Will the GBPUSD support zone hold this time around?-No gambar.1

The Pound has been giving way to the US dollar since last week following the Fed's thoughts on accelerating the tapering with the rising inflation in the US. In fact, the GBPUSD has fell over 165 pips from December 17 to December 20. It was only yesterday when the market has finally seen a bullish response from the pound right after the Bank of England's surprising rate hikes. However, the bears quickly fended off this move with a strong area of confluence in the 1.32400 area.

THE CONFLUENCE BEHIND THE MOVE

As seen in the chart above, the GBPUSD has been repelled exactly at the the 38.2% Fibonacci retracement zone. In common use, a bounce off the 38.2% level is usually a precursor to a bigger move. Shorting exactly at this level would have also been a good idea with the 50 Moving Average perfectly lining up to the zone acting as a dynamic resistance. This was also cemented even further as price broke past previous support which then transformed the area to a turncoat resistance.

EXPECTATIONS

In light of all of that, I am expecting price to supply a move further down retesting the support zone. The support zone in the chart is seen as an area of significance as it has already provided 4 strong rejections preventing bears to drive price to new levels.

The only question now is:

1. Will the support zone be able to provide a stronger move up which would finally shift the market's medium-term bias?

2. Has the support zone finally weakened after 4 claw-strikes from the bears?

We'll find out!

Having a hard time keeping up with the analysis? Here's some lessons for you to check out：

1. How do spot and trade support and resistance?

2. How do you use and trade a moving average?

3. How do you use and trade the Fibonacci Retracement?

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