GBP/USD traded lower on Tuesday, after it hit resistance near the 1.2755 level overnight. The pair continues to trade above the upside support line drawn from the low of May 18th, but it has recently distanced itself from that line. What’s more, the current price action suggests a non-failure swing top pattern, which if completed may allow a deeper correction to the downside. Thus, although the broader trend remains to the upside, we see decent chances for more declines at the moment.
A clear break below 1.2585 would confirm the completion of the non-failure swing formation and may encourage the bears to dive towards the low of June 4th, at around 1.2500. If that level is not able to halt the slide either, then we may see the slide extending towards the 1.2425 barrier, marked by an intraday swing peak formed on June 1st. Slightly below that level runs the aforementioned upside support line, which could also provide support.
Looking at our short-term oscillators, we see that the RSI lies fractionally above 50, but points down and appears ready to cross below that equilibrium, while the MACD, although positive, lies below its trigger line, pointing down as well. Both indicators detect slowing upside speed and corroborate our view for further correction to the downside.
In order to start examining the resumption of the prevailing uptrend, we would like to see a rebound back above 1.2755. Such a move would confirm a forthcoming higher high and may prompt the bulls to target the 1.2865 hurdle, marked as a resistance by the inside swing low of March 10th. Another break, above 1.2865, may pave the way towards the peak of the day after, at around 1.2980.
Disclaimer:
The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83% of retail investor accounts lose money when trading CFDs with the Company. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please read the full Risk Disclosure.
Copyright 2020 JFD Group Ltd.