GBP/USD outlook: Bears crack key supports and look to continue larger downtrend

Slobodan Drvenica Windsor Brokers

GBP/USD

Cable extends weakness into the fourth straight day and tested key support at 1.3670 (Mar 25 low / 100DMA) in early European trading on Friday.

Bears emerged from daily cloud (cloud base lays at 1.3712) after trading within thick cloud for two weeks, generating bearish signal for extension of six-week downtrend from 1.4238 (2021 high) which requires confirmation on weekly close below 1.3670 pivot.

Cable is weighed by the issues with AstraZeneca vaccine as the EU imposed certain age restrictions for the vaccine but left to the member countries to decide, with rising violence in the Northern Ireland additionally pressuring pound.

Firm break of 1.3670 would expose next pivotal support at 1.3641 (Fibo 38.2% of 1.2675/1.4238 upleg), violation of which would confirm signal for bearish continuation.

Negative daily studies support the action but oversold stochastic and subsequent bounce after testing 1.3670 support suggest bears may take a breather before resuming.

Broken 10DMA (1.3784) should cap upticks and maintain bearish bias, while extension and close above 20DMA (1.3810) would sideline bears.

Res: 1.3750; 1.3784; 1.3810; 1.3839.
Sup: 1.3700; 1.3670; 1.3641; 1.3609.

Interested in GBP/USD technicals? Check out the key levels

1. R3 1.3834
2. R2 1.3808
3. R1 1.377
PP 1.3745
1. S1 1.3707
2. S2 1.3681
3. S3 1.3643

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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