GBP/USD outlook: Extended sideways mode expected while 20DMA holds

Slobodan Drvenica Windsor Brokers

GBP/USD

Cable edged lower in early US trading on Monday but remains positive for the day. Near-term action holds above 20 DMA for the second day, underpinned by formation of 10/20DMA's bull cross that reduces negative impact from Friday's bearish daily candle, which generated an initial signal of possible end of four-day congestion. Daily studies are mixed (rising bullish momentum / falling stochastic/mixed MA's / flat RSI) lacking clearer signal, but the action is weighed by weekly cloud and converging 55/200DMA's in attempt to form death-cross. Close below 20DMA (1.2175) is required for initial bearish signal, with extension below key Fibo support at 1.2074 (38.2% of 1.1409/1.2485) to signal reversal. Extended sideways mode could be expected while 20DMA holds, while clear break above lower platform at 1.2485 would signal bullish continuation.

Res: 1.2327; 1.2345; 1.2421; 1.2485
Sup: 1.2209; 1.2175; 1.2131; 1.2100

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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