GBP/USD has declined considerably again after it failed to surpass the short-term moving averages from the beginning of the month. During the preceding week, cable reached a fresh more than two-year low of 1.2380 and touched the return line of the downward sloping channel.

The negatively aligned Tenkan-Sen line serves as a testament to the negative short-term momentum that is in place. The RSI indicator is moving south in the bearish territory, while the %K line of the stochastic oscillator created a downside crossover with its %D line, suggesting an extension of the selling interest.

Immediate support to further declines may be taking place around the 1.2360 – 1.2380 support zone, while the 1.2100 level, identified by the low on March 2017, could provide additional support in case of steeper losses.

A move to the upside may meet resistance near 1.2878, this being a peak recorded on July 12, with the area around it also encapsulating the 23.6% Fibonacci retracement level of the down-leg from 1.3380 to 1.2380 near 1.2615. In case of stronger bullish movement could send prices towards the 38.2% Fibonacci mark of 1.2760.

To summarise, GBP/USD looks negative in the near-term, while in the medium-term the picture is seen bearish unless the price breaks above the descending channel, which has been holding since March 13.


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This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Source: XM

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