GBP/USD Price Analysis: Sell-off cutting into Day-3 longs, 1.2050 eyed for days ahead

GBP/USD has sold off from a 50% mean reversion of the prior bearish daily impulse.
We are seeing the following through with 1.20 eyed but the price is meeting some support at this juncture.
This opens the risk of a correction before the next move to the downside.

Ross J Burland FXStreet

GBP/USD rallied in a parabolic fashion on Thursday on the third day of demand for the British Pound. The pair travelled from a low of 1.2056 to a high of 1.2194 before reversing back to test the midpoint of the 1.21 area and recently reaching a sell-off low of 1.2130.

The US Dollar broke structure on the downside in the late London session and extended the move into the New York open only to reverse. Risk-off kicked in and sent the US bourses packing and cable off a cliff as the following illustrates:

DXY H1 chart

US500 H1 chart

GBP/USD technical analysis

GBP/USD has dropped into the parabolic rally and the length that had been building up into a climax. We had three levels of rise since the day opened in Asia in a massive pump-up that has concluded in a dump in the New York session. this coincided with the cash opening hour on Wall Street, 1730 GMT and at the London fix of 1600 GMT.

We are seeing the followthrough with 1.20 eyed but the price is meeting some support at this juncture:

This opens the risk of a correction before the next move to the downside with the ATR of 117 pips for the day already done within the 137 pip range so far:

A bullish close on the day will be giving us three bullish closes in a row and leaves the risk of another sell-off on Friday:

The price has already corrected to a 50% mean reversion of the prior bearish daily impulse.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

AUD/USD sits at three-week highs above 0.7000 on hawkish RBA-speak

AUD/USD holds a positive bias for the fourth straight day, trading above 0.7000 in the Asian session on Wednesday and at three-week highs. RBA Deputy Governor Andrew Hauser's hawkish remarks and inflation concerns underpin the pair. However, the upside appears capped as the US Dollar attracts some buyers amid looming US-Iran uncertainty.

USD/JPY remains confined in a familiar range below 158.50

USD/JPY sees some dip-buying in the Asian session on Wednesday, though it remains confined within a multi-week range near 158.50 as the uncertainty over the timing of the next BoJ rate hike keeps Japanese Yen bulls on the defensive. Meanwhile, hawkish Fed expectations, bolstered by inflation risks stemming from volatile oil prices, underpin the US Dollar. However, looming intervention fears could limit JPY losses and cap the currency pair.

Gold bounces off weekly low; Fed hike bets and modest USD recovery keep upside limited

Gold recovers slightly from the weekly low, around the $4,100 neighborhood, though the upside potential seems limited amid a bearish fundamental backdrop. Inflation risks stemming from volatile oil prices underpin prospects for further policy tightening by the US Federal Reserve. Furthermore, a modest US Dollar recovery from a near three-week low could contribute to capping bullion.

Zcash's bullish reversal eyes $1,698 peak on NU7 upgrade

Zcash (ZEC) shows signs of bullish recovery above $1,200 on Wednesday, following a 9% rebound the previous day linked to the upcoming NU7 upgrade. Blockworks released a Zcash holders report on Tuesday, highlighting steady network growth. The technical outlook for ZEC is bullish, with bulls eyeing an extended rally toward $1,698.

US – Midterm update: Pre-election tail risk scenarios

With two weeks until the US midterm elections on 3 November, early voting has already opened in more than 40 states. Prediction markets are broadly unchanged since we published our Midterm update, 13 October. The prediction market Polymarket continues to see Democrats winning both chambers as the most likely outcome, with a 62.5% probability.

The US Dollar fell. Gold didn't rally. That tells you everything

Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.