GBP/USD Tests A Key Chart Point - British Pound vs USD Price Forecast
GBP/USD Price Technical Outlook
GBP/USD Price – Multi Week Low
On Friday, Cable tumbled to its lowest level in over two months at 1.2881, then closed the weekly candlestick in the red with 2.4% loss. This week, the market reversed higher as some shorts seemed to cover.
Alongside that, the Relative Strength Index (RSI) rose from 40 to 45 reflecting a weaker downtrend move.
GBP/USD DAILY PRICE CHART (Sep 15, 2018 – FEB 12, 2020) Zoomed out
GBP/USD DAILY PRICE CHART (SEP 20 – FEb 12, 2020) Zoomed IN
From the daily chart, we noticed that at the start of last week GBP/USD declined then closed below the 50-day average generating a bearish signal. On Thursday, the market fell to a lower trading zone 1.2774 – 1.2965. Yet, this week some bears pulled back allowing the pair to rally then test the high end of the zone.
A close above the high end may lead more bears to exit the market causing GBPUSD to rush towards 1.3048. Further close above this level opens the door for a possible push towards 1.3300 handle. Nevertheless, the weekly resistance level and area marked on the chart (zoomed in) should be considered.
In turn, any failure in closing above the high end of the zone may encourage GBPUSD bears to comeback and press towards the low end of the zone, contingent on clearing the weekly support level underlined on the chart.
GBP/USD Four Hour PRICE CHART (Jan 28 – FEB 12, 2020)
Looking at the four-hour chart, we notice this month GBP/USD started a downtrend move creating lower highs with lower lows. However,the price developed inverted head and shoulders pattern, then yesterday broke above the neckline located at 1.2947 hinting to rally above 1.3000 handle.
Thus, a break above 1.3006 could lead the market towards 1.3048. Although, the daily resistance level underscored on the chart should be kept in focus. On the flip-side, a break below 1.2925 could send GBPUSD towards 1.2876. Nonetheless, the daily support level printed on the chart should be watched closely.
See the chart to find out more about key levels Cable would encounter in a further bearish /bullish scenario.
Written By: Mahmoud Alkudsi
Please feel free to contact me on Twitter: @Malkudsi
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.