GBP/USD Finds Support at 100-Day EMA

GBP/USD (daily chart as of June 9, 2014) found support at the 100-day EMA on both May 29 and June 4 (green arrow 4 and arrow 5 on chart). Price then rebounded to test 1.6820 (key resistance level since Feb 16) again and the short-term downtrend line connecting May 6 and May 21 highs (blue arrows).

The 100-day EMA is the pair’s major long-term support since 2013. If price respects the resistance of 1.6820 and the short-term downtrend line, it could turn down to test the 100-day EMA once again. Note that only a breach of the 100-day EMA would change the longer-term view of the currency pair.

Bank of England Governor Carney said on Wednesday that “the economy has started to head back to normal.” The BOE benchmark rate will remain unchanged at a record low of 0.5% until next year, eliminating speculation on a sooner-than-expected rate hike.

Support levels below:

1st support: 100-day EMA

2nd support: 1.6650 (April 15 low)

3rd support: 1.6540 (April 4 low) or 200-day EMA

Resistance levels above:

1st resistance: 1.6820 (key resistance) or short-term downtrend line

2nd resistance: 1.6920 (May 21 high)

3rd resistance: 1.6995/7000 (May 6 high/psychology level)