GBP/USD: Momentum of the sell-off on Cable continues [Video]

GBP/USD

Momentum of the sell-off on Cable continued yesterday amidst a wave of dollar strength flooding through forex major pairs. Another huge bear candle took Cable decisively below the old key November low at $1.2193 to open the September 2019 low of $1.1957. Going purely on technicals, the move has taken RSI to its lowest level since August 2018, and although this reflects the extent of the bearish momentum, is also stretched. It was therefore interesting to see a rebound (to the pip) from $1.2000. Having seen that rebound and prevented from testing the crucial $1.1957 September low is the market looking towards a near term recovery? The bulls have a lot of work to do but reaction to the $1.2193 old key low will now be a gauge for the prospect of a recovery. This is overhead supply now and the hourly chart shows a resistance band between $1.2200/$1.2275. A decisive move above 50 on the hourly RSI could be an early indication to watch for too. Given the huge and precipitous run lower in the past seven sessions (which cut as much as -1200 pips off Cable), if a rebound sets in, there could be a sizable retracement. For now though, there is a continuation of rallies being sold into and pressure on $1.2000 has to remain the most likely scenario. However, a positive close tonight would be a start. Key near term resistance is at $1.2430.