- A usual corrective move may drag the cable towards 1.2100.
- The 50-EMA at 1.2129 is still untouched but is likely to get tested sooner.
- A range shift by the RSI (14) to 40.00-60.00 indicates that the cable has surrendered the upside momentum.
The GBP/USD pair has corrected to near 1.2140 after surrendering the critical support of 1.2180 on Tuesday. The cable witnessed an extreme sell-off on Tuesday after failing to recapture monthly highs at 1.2293. A corrective move is likely to expand further as investors have underpinned risk-off impulse due to escalating US-China tensions over Taiwan.
On a four-hour scale, the cable is auctioning in a Rising Channel formation that favors a north-side on a broader note but faces various healthy corrections in the upside journey. The upper portion of the above-mentioned chart pattern is placed from July 13 high at 1.1968 while the lower portion is plotted from July 14 low at 1.1760.
The asset has surrendered the 20-period Exponential Moving Average (EMA) at 1.2190 while the 50-EMA at 1.2129 is still untouched but is likely to be tested sooner.
Meanwhile, the Relative Strength Index (RSI) (14) has slipped into the 40.00-60.00 range, which indicates that gold prices are not carrying bullish momentum for a while.
A minor pullback towards 1.2150 will be a bargain sell for the market participants. This will drag the cable towards the round-level support at 1.2100. A decisive slippage below 1.2100 will unleash the greenback bulls and the cable will drag further to July 29 low at 1.2063.
On the flip side, the cable may start a fresh bullish impulsive wave if the asset oversteps the 20-EMA at 1.2190. An occurrence of the same will drive the asset towards July 29 high at 1.2246, followed by a monthly high at 1.2294.
GBP/USD four-hour chart
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