- A test of H&S formation has sidelined the retail participants.
- Declining 20-and 50-EMAs add to the downside filters.
- A drop below 40.00 by the RSI (14) will trigger the downside momentum.
The GBP/USD pair is displaying back and forth moves in a narrow range of 1.2048-1.2080 in the early Tokyo session. The cable has displayed a pullback move after dropping near the psychological support of 1.2000 on Friday. Pound bulls are failing to gain strength and are likely to remain on the tenterhooks.
A test of a Head and Shoulder formation on an hourly scale has kept the investors on the sidelines. Usually, the above-mentioned pattern indicates a bearish reversal after a prolonged positive move in the asset. The neckline of the chart pattern is marked from July 29 low at 1.2063.
The 20-and 50-period Exponential Moving Averages (EMAs) at 1.2090 and 1.2120 respectively are declining sharply, which adds to the downside filters.
Meanwhile, the Relative Strength Index (RSI) (14) is oscillating around 40.00 and may display a sheer downside move on its violation.
A downside move below Monday’s low at 1.2050 will drag the cable towards the psychological support at 1.2000, followed by July 16 low at 1.964.
Alternatively, the pound bulls could regain their mojo and may drive the asset higher towards the August 3 low and high at 1.2135 and 1.2200 after violating the 20-EMA at 1.2090.
GBP/USD hourly chart
-637955338122627481.png)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.