Cable showing signs of seller strength off double-top NL

2020年5月24日

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Though under pressure, support at 1.1904/1.2235 remains in motion in May. Neighbouring resistance, should we see an attempt at recovery, can be found in the form of a trendline (1.7191). A violation of support, nevertheless, puts forward a 127.2% Fib ext. level at 1.1297.

Concerning the primary trend, lower peaks and troughs have decorated the monthly chart since early 2008.

Daily timeframe:

Partially altered from previous analysis -

A few pips south of supply at 1.2649/1.2799 (prior demand), a double-top pattern formed at 1.2647, with May 13 consuming the neckline (April 21 1.2247) and establishing a potential take-profit target (purple) around 1.1855.

The week saw the British pound initially come out fighting, clawing back some losses vs. the greenback. However, traders, particularly pattern traders, will note the double-top neckline at 1.2247 holds firm.

H4 timeframe:

Sterling, according to the technical picture on the H4 chart, has been grinding channel support (1.2642 – prior resistance) since topping Tuesday at 1.2296.

Supply at 1.2244/1.2209 contained upside Friday, establishing a notable candle wick off its lower edge. This proposes we may push for the original channel support (1.2266) and maybe even fresh demand at 1.1771/1.1886, extended from March 25. Areas to the upside, aside from Tuesday’s high at 1.2296, is found at supply from 1.2477/1.2438.

H1 timeframe:

Formed in early European trade Friday, following UK retail sales data falling by a record 18%, supply at 1.2220/1.2199 held price action lower into the US session and closed within a few pips of 1.2150.

Dethroning 1.2150 this week throws light on demand at 1.2094/1.2125, a zone joining with a 161.8% Fib ext. level at 1.2109, the round number 1.21 and channel support (1.2185).

The 100-period simple moving average, currently circling the 1.2222 neighbourhood, is seen flattening after a fleeting move higher from May 19.

Structures of Interest:

Long term:

Monthly price holds 1.1904/1.2235, though this area is positioned against the major trend.

Sellers on the daily timeframe appear to be taking charge around the underside of the daily double top neckline at 1.2247.

Short term:

Buyers seem feeble off H4 channel support (1.2642), weighed by selling pressure out of H4 supply at 1.2244/1.2209. This, together with daily price structure, may prompt a break of 1.2150 on the H1 timeframe towards demand at 1.2094/1.2125, perhaps welcoming intraday breakout scenarios today.