GBP/USD Faces Key Resistance, Bears at Risk -British Pound vs USD Price Forecast
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GBP/USD Price Technical Outlook
- GBP/USD slower downtrend momentum
- Will bulls control the price action? Watch the levels
GBP/USD Price – Bears Pullback
On Friday, British Pound declined against US Dollar to 1.2726 -its lowest level in nearly four and half months. The market rallied after, as some bears seemed to cover. Yet, the weekly candlestick closed in the red with 1.1% loss. This week, more bears have eased up allowing Cable to rally further.
Alongside that, the Relative Strength Index (RSI) rose from 35 to 49 pointing out weaker downtrend momentum.
GBP/USD DAILY PRICE CHART (April 1, 2018 – MaR 5, 2020) Zoomed out
GBP/USD DAILY PRICE CHART (SEP 16– Mar 5, 2020) Zoomed IN
From the daily chart, we noticed that on Feb 13 GBP/USD could not overtake the uptrend line originated from the Nov 7 low at 1.2768. In the following days, the pair failed to close above 1.3048 highlighting bull’s weakness at that stage. This encouraged bears to take the initiative and control the price action.
On Tuesday, the market rallied to a higher trading zone 1.2774- 1.2965 as bears showed more sway. Currently, the pair eyes a test of the high end of the zone.
A close above the high end of the zone may lead GBPUSD to where its failed last month i.e. 1.3048. Further close above this price opens the door for bulls to push towards 1.3300. In that scenario, the weekly resistance levels underlined on the chart (zoomed in) should be kept in focus as some traders may exit/join the market around these points.
On the other hand, any failure in closing above the high end of the zone keeps bears in control. This may embolden them to press again towards the low end of the zone. Further close below that level could mean more bearishness towards 1.2548. That said, the weekly support levels marked on the chart should be watched closely.
GBP/USD Four Hour PRICE CHART (FEB 7 – Mar 5, 2020)
Looking at the four-hour chart, we noticed that on Feb 26 GBP/USD broke below the uptrend line originated from the Feb 20 low at 1.2848. In the following day, the price failed to overtake the uptrend line, reflecting the bearish outlook of the market. Currently, the market trades above the uptrend line originated from the Feb 28 low at 1.2726.
Thus, a break below 1.2754 could send GBPUSD towards 1.2706. Although, the daily support level underscored on the chart should be considered. On the flip side, any break above 1.2988 might cause Cable to rally towards 1.3048. Nevertheless, the weekly resistance level printed on the chart should be monitored.
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.