Overview :
On the one-hour chart, the shared currency is trading in a bear trend below the 100 -day simple moving averages (EMAs). The GBP/USD pair's breaking above a multi-week trend line and is challenging the 100 EMA.
When applying RSI Analysis to the price chart, one can see that price is trading below the EMA 100 period Moving Average line, a fact which confirms the GBP/USD pair's downward direction. Additionally, the Relative Strength Index (RSI) registers values below the 30 line which indicates negative sentiment.
Suggesting bearish momentum in the medium term. The GBP/USD pair is consolidating the weekly gains below the 1.3710 resistance as bears remain in control.
A break below the level of 1.3580 can expose the 1.3540 support, according to the technical Fibonacci indicator.
US Dollar and Brexit
An improvement in market sentiment and the deal between the United Kingdom and the European Union on Brexit boosted the pair during the week.
Also, the Greenback pulled back across the board, adding more strength to the move lower in the GBP/USD pair.
The GBP/USD pair posts biggest weekly gains since 2020 and highest close at the top point of 1.3710.
Near the end of the week, it is hovering around 1.3580, posting the best weekly result in months.
The last leg higher took place amid a decline of the Pound.
The GBP /USD pair has broken support at the level of 1.3653 which acts as a resistance now.
According to the previous events, the GBP/USD pair is still moving between the levels of 1.3653 and 1.3453.
Therefore, we expect a range of 200 pips in coming three days. The trend is still below the 100 EMA for that the bearish outlook remains the same as long as the 100 EMA is headed to the downside.
Hence, the price spot of 1.3650 -1.3710 remains a significant resistance zone.
Consequently, there is a possibility that the GBP/USD pair will move downside. The structure of a fall does not look corrective.
In order to indicate a bearish opportunity below 1.3650, sell below 1.3600 -1.3650 with the first target at 1.3545.
Besides, the weekly support 1 is seen at the level of 1.3545.
If the pair succeeds in passing through the level of 1.3545, the market will indicate the bearish opportunity below the level of 1.3545 in order to reach the second target at 1.3511.
In our opinion, the GBP/USD pair may grow up to test 1.3511 from below and then form the second descending impulse with the third objective 1.3450 so as to form a double bottom at the same time frame.
However, traders should watch for any sign of a bullish rejection that occurs around 1.3450. The level of 1.3450 coincides with the last bearish wave which is expected to act as a major support today.
Since the trend is below the 78% Fibonacci level (1.3653), the market is still in a downtrend. Overall, we still prefer the bearish scenario.
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