GBP : Technical Key Levels

(Thu, 5 Nov 2020). The British Pound could come under pressure in the coming days, as bearish technical setups begin to take place on multiple GBP crosses.

GBP/USD

The GBP/USD exchange rate’s rebound from the September low (1.2675) appears to be running out of steam, as price fails to hold above key confluent support at the 21-DMA (1.2976) and August low (1.2981). Although price continues to track within the confines of an Ascending Channel, with the RSI and MACD beginning to push below their respective neutral midpoints, the path of least resistance seems skewed to the downside.

A break below the 100-day moving average (1.2888) would probably signal the resumption of the downtrend extending from the yearly high (1.3483) and precipitate a push to test key support at the 61.8% Fibonacci (1.2613). Conversely, a rebound back towards the March high (1.3200) could be on the cards if psychological support at the 1.2900 mark holds firm.

GBP/JPY

GBP/JPY rates could also be poised to extend recent losses, as price slips below all four moving averages and potentially carves out the right shoulder of a Head and Shoulders topping pattern. The development of the RSI and MACD indicator are indicative of swelling bearish momentum, as both oscillators continue to track firmly below their respective neutral midpoints.

A breach of support at the 135.00 mark would probably ignite a more extended pullback towards the 78.6% Fibonacci (133.75), with a daily close below bringing the June low (131.76) into focus. On the other hand, a rebound higher could be on the cards if support at the monthly low (134.87) holds firm, with a close above the sentiment-defining 200-DMA (136.64) needed to carve a path back towards the August low (137.75).

GBP/NZD

Finally, GBP/NZD is eyeing a push back towards the September low (1.9055) after reversing away from resistance at the trend-defining 50-DMA (1.9527) and slipping to fresh monthly lows. With the RSI continuing to track lower and a bearish crossover taking place on the MACD indicator, the path of least resistance seems lower.

A break below the October low (1.9324) could generate a push towards psychological support at the 1.9300 mark, with a daily close below signalling a resumption of the primary uptrend and bringing the September low (1.9055) into play. On the contrary, a reversal back towards the 50-DMA (1.9527) could eventuate if support at October low (1.9324) continues to stifle selling pressure.

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