Last week, we saw GBP/USD rally sharply from around 1.4635 ahead of the FOMC statement to 1.5165 after it. The reaction was more from 1.47 to 1.5165, but was nonetheless a very sharp one. The 1H chart shows the reaction candle which left a tail above 1.50. 1.50 appears to be the more common high as price action continued to develop.
This week, price failed to clear 1.50 several times. If we ignore last week’s spike, the price action would be an ascending triangle, which actually has some bullish bias. However, the prevailing trend has been bearish, and we essentially have a neutral, indecisive technical picture.
As we get started with the 3/25 session, price is testing the 200-hour simple moving average and a rising speedline from last week’s low of 1.4635. A break below 1.4820 should clear these key support factors which would open up the 1.4635 low.
When we look at the 4H chart, the rally last week and the consolidation that followed remain within the context of a bearish market. Price held below the 100-, and 200-period SMAs, and is about to cross back below the 50-period SMA in the 4H chart, (which is the same as the 200-hour SMA). Another key evidence that bears are in charge is that the 4H RSI held below 60 for the most part, which reflects maintenance of the prevailing bearish momentum at least in March.
With the prevailing downtrend intact, the current technical developments in the near-term and short-term suggest cable will be testing the 1.46 handle soon, maybe even this week. Again, if GBP/USD can break below 1.4820 and hold below 1.49 after a pullback, then the outlook towards 1.4635 (low on the year) and towards 1.46 will be stronger.
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