GBP/USD Price Analysis: Downside pressure from greenback bulls exposes a drop to near 1.2500
- The cable has plunged around 3.70% in the last four trading sessions.
- A breakdown of the Falling Channel formation has strengthened the greenback bulls.
- Investors seek a pullback for making a short entry.
The GBP/USD pair is falling like a house of cards since Friday after slipping below the two-week-old barricade at 1.2973. The asset has eased around 3.70% in the last four trading sessions and is showing no sign of reversal yet.
The downside breaking of the Falling Channel on the daily scale has vigorously strengthened the greenback bulls. The upper boundary of the above-mentioned chart pattern is placed from June 2021 highs at 1.4249 while the lower boundary is plotted from April 2021 low at 1.3669. A breakdown of the Falling Channel results in volume expansion and wider ticks.
The 10- and 20-period Exponential Moving Averages (EMAs) at 1.2838 and 1.2945 respectively are trending lower, which adds to the downside filters.
Also, the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which signals a fresh downside impulsive wave ahead.
After a juggernaut downside, a pullback looks likely. Therefore, investors should wait for a pullback to near the round level barricade of 1.2800 for building fresh shorts. Responsive selling at 1.2800 will drag the asset towards the round level supports at 1.2600 and 1.2500 respectively.
On the flip side, the cable can perform well if the asset oversteps the psychological resistance of 1.3000. This will send the pair towards Thursday’s high at 1.3090, followed by a three-week high at 1.3147.
GBP/USD daily chart
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Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
