GBP/USD outlook: Recovery faces strong headwinds on approach to key 1.3400 resistance zone

Slobodan Drvenica Windsor Brokers

GBP/USD

Cable moves within a narrow-range sideways mode for the second consecutive day, after 1% advance last week that completed reversal pattern on weekly chart (after the downleg from 1.3869 was contained by ascending trendline, drawn off 1.0348, 2022 low) and generated positive signal on close above weekly Ichimoku cloud top (1.3335).

On the other side, the picture on daily chart is not that optimistic (14-d momentum remains in negative territory and turns south, stochastic is emerging from overbought territory) as long upper shadows on last two daily candles point to strong headwinds from very significant 1.3400 resistance zone (consisting of converged 200/100/55DMAs / 50% retracement of 1.3653/1.3140 / daily cloud base).

The second consecutive daily Doji candle signals strong indecision and risk of further hesitation and possible recovery stall on approach to pivotal 1.3400 resistance zone.

More likely scenario in the near term would be dips towards 1.3300 zone (psychological/20DMA) which needs to contain dips and keep in play hopes for fresh acceleration higher and possible attack at 1.3400 zone barriers.

Conversely, firm break of 1.3300 handle would further weaken near-term structure and risk deeper drop.

Res: 1.3385; 1.3400; 1.3412; 1.3460.
Sup: 1.3330; 1.3300; 1.3256; 1.3212.

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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