GBP/USD Price Analysis: A weekly head-and-shoulders pattern targets 1.2980 on the long-term
|- The British pound falls amid downbeat market sentiment.
- GBP/USD could be downward-pressured by a weekly head-and-shoulders pattern.
- GBP/USD: The weekly and the daily chart support the downward bias.
The GBP/USD is trading at 1.3464, down 0.02% as the Asian session begins. The market sentiment is downbeat. Asian futures look tilted to the downside, except for the Hang-Seng and the Nikkei 225, gaining between 0.32% and 0.03%, respectively.
GBP/USD Price Forecast: Technical outlook
Weekly chart
The chart depicts a head-and-shoulders pattern, which at press time, is trading below the neckline (pink line), around 1.3464.
The head-and-shoulders target is 1.2982. However, there are some hurdles on the way down. The first support would be the 100-week simple moving average (WSMA) around 1.3244, immediately followed by the 200-(WSMA) at 1.3161, and then the 1.2982 target.
On the flip side, in case of a break above the neckline, it could invalidate the pattern. The first supply zone on the way up would be the 50-WSMA around 1.3722.
The Relative Strength Index is at 38.60, aiming lower, supporting the downward bias.
Daily chart
Cable tested the neckline of the weekly head-and-shoulders pattern around 1.3517 but retreated below 1.3500 and looks poised to consolidate as momentum indicators exit from oversold levels. The price action of the last two days formed a bullish haramI candle pattern, though a close above 1.3560 above the neckline is required to confirm its validity. In case of that outcome, then GBP/USD could be pressured to the upside. The first supply zone on its way up would be the psychological 1.3600 figure.
On the other hand, failure to break above the neckline would pressure the GBP/USD pair to the downside. The first support on its way down would be 1.3400, followed by 1.3300 and then 1.3244, the 100-week simple moving average.
The Relative Strength Index is at 33.16, slightly flat, signaling exhaustion on the downward move. The pair might consolidate before resuming the previous direction.
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