GBP/USD Analysis
Evening Update: After retracing from 1.2800, will the GBP/USD pair keep falling or will it rise again ?
On the weekly chart, the GBP/USD pair is currently trading below the 200 DMA after running into significant resistance around the 1.2800–1.2850 zone. Given that GBP/USD is weighted at 12% in DXY, the Dollar Index's noticeable increase was the main cause of the decline in GBP/USD. The Dollar Index was trading within a firm support range of 100.50–100.80, as we covered in our article. The chart indicates that there is an opportunity to sell GBP/USD at every uptick.
- The GBP/USD pair declined sharply and fell below the 200 DMA.
- The chart shows that the GBP/USD pair was strongly rejected by the trendline and the 200 DMA. As a result, it might enter the 1.2400 and 1.2100 zones, respectively.
- On the weekly chart, the convergence point of the 200 DMA with trendline resistance is at 1.2850. We might expect the price of GBP/USD to continue declining because any increase in price could be met with a large supply.
Kindly refer to the chart indicated above to observe how the GBP/USD resistance is moving around the weekly 200 DMA. GBP/USD dropped and is currently trading close to the 1.2650 zone, where the trendline resistance was located, roughly between 1.2800 and 1.2850. Regarding DXY, our analysis revealed that an increase from its range of 100.50 to 100.80, a strong support zone, was expected for the Dollar Index. GBP/USD decreases as the Dollar Index rises and vice versa due to their negative correlation. Thus, the rise in DXY was a significant influence in the drop in GBP/USD.
Let's now examine the GBP/USD chart using RSI:
Please refer to the preceding chart, which indicates that even if the price of GBP/USD gained somewhat, the RSI produced lower lows, indicating a bearish divergence.
RSI Divergence : When the price goes away from the RSI, it is called an RSI divergence. Put differently, a change in momentum could show up on a chart before a corresponding change in price. A bearish divergence occurs when the RSI reading becomes overbought and is followed by a lower high that indicates higher highs in the price.
There might be more selling of GBP/USD since there appears to be a chance to sell with every increase. In the days to come, 1.2400 and 1.2100 will be the lowest values.
The GBP/USD pair may decline even lower at the 1.2400 and 1.2100 zones. As previously noted, the GBP/USD is inversely proportionate to the Dollar Index, therefore DXY may rise to the 1.0350 and 1.0400 zones, respectively.
Please review the weekly chart to see the GBP/USD support and resistance levels. Every level is shown in a spot chart.
|
GBP/USD |
Support |
Resistance |
|
Level 1 |
1.2400 |
1.2800 |
|
Level 2 |
1.2100 |
1.2850 |