GBPUSD Range Setup (Oct 31, 2014)

Price bounced off the 1.5950 minor psychological support level and may be headed for the top of the range.

The resistance is located around the 1.6125-1.6150 levels, as the pair has been forming lower highs recently. Stochastic is still moving towards the oversold zone and reflecting selling momentum, which suggests that another test of support is possible before the pair heads any higher.

MACD is also suggesting a potential return in buying momentum as the indicator is starting to climb already. There are no event risks due from the UK while the US economy has a few medium-tier reports on tap that might trigger movement for the GBPUSD pair.

US personal spending and income, core PCE price index, and Chicago PMI are due today. Recall that the FOMC turned hawkish in their latest policy statement and strong data might add support to this bias, which might be positive for the dollar. In that case, a downside break from support and a longer-term selloff is also possible.

By Kate Curtis from Trader's Way