GBP/USD Price Analysis: Set for a new low ahead of Inverted Flag break, 1.2250 eyed
|- Cable sees more downside on Inverted Flag formation.
- The RSI (14) has tumbled below 40.00, which favors the downside.
- The 20-EMA has acted as a major barricade for the asset.
The GBP/USD pair is oscillating in a range of 1.2280-1.2376 after a sheer downside from last week’s high at 1.2638. The cable is inching lower right from the first order placed in the Asian session at 1.2349. The asset is likely to touch the previous week’s low at 1.2276.
The formation of an Inverted Flag chart pattern on an hourly scale indicates the continuation of a bearish momentum after a consolidation phase. Usually, a consolidation phase after a downside move denotes the placement of offers by the initiative sellers, which prefer to enter after an establishment of a downside move.
The asset is facing headwinds from the 20-period Exponential Moving Average (EMA), which is trading at 1.2328. Meanwhile, the 50-EMA at 1.2372 is scaling firmly lower, which adds to the downside filters.
The Relative Strength Index (RSI) (14) has slipped below 40.00 from its oscillation range of 40.00-60.00, which signals a fresh impulsive downside wave going forward.
A decisive drop below the previous week’s low at 1.2276 will push the asset towards the 7 April 2020 low of 1.2164. Breach of the latter will drag the asset towards the 18 May 2020 low at 1.2075.
On the flip side, pound bulls could regain strength if the asset oversteps April 28 low at 1.2411. This will send the asset towards the psychological resistance at 1.2500, followed by the previous week’s high at 1.2638.
GBP/USD hourly chart
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