Technical Analysis – GBPUSD trapped within caution zone
November 2, 2023 4:26 pm
GBPUSD cannot sustain strength above 1.2200
Short-term outlook remains grim
Bank of England holds interest rates and guidance steady
The Bank of England’s decision to keep interest rates and its guidance for “higher for longer rates” unchanged on Thursday prevented GBPUSD from breaking out of the bearish channel at 1.2170 or from rising above the broken support trendline from September 2022 at 1.2200.
Downside risks are still present as the RSI remains below 50 for the third consecutive week and the stochastic oscillator is about to move downward. The falling constraining line from May 2021 could be another headache for the bulls slightly higher at 1.2275, along with the 50-day simple moving average (SMA). If the pair were to surge above 1.2300, the 200-day SMA might immediately curb upside movements near 1.2430, while the 1.2500 bar could prove another tough obstacle ahead of the 1.2588 area.
Alternatively, a clear close below the 1.2100 mark can result in a downtrend resumption below 1.2036. If that happens, support could initially develop around the falling restrictive line from November 2021 at 1.1980 and then near the 1.1900 number. Falling lower, the pair could re-examine the 2023 low of 1.1800 before heading for the channel’s lower boundary at 1.1740.
In a nutshell, GBPUSD has not exited the caution zone above 1.2275-1.2300 yet, whilst a rally above 1.2500 is still required to confirm a bullish reversal.
GBPUSD cannot sustain strength above 1.2200
Short-term outlook remains grim
Bank of England holds interest rates and guidance steady
The Bank of England’s decision to keep interest rates and its guidance for “higher for longer rates” unchanged on Thursday prevented GBPUSD from breaking out of the bearish channel at 1.2170 or from rising above the broken support trendline from September 2022 at 1.2200.
Downside risks are still present as the RSI remains below 50 for the third consecutive week and the stochastic oscillator is about to move downward. The falling constraining line from May 2021 could be another headache for the bulls slightly higher at 1.2275, along with the 50-day simple moving average (SMA). If the pair were to surge above 1.2300, the 200-day SMA might immediately curb upside movements near 1.2430, while the 1.2500 bar could prove another tough obstacle ahead of the 1.2588 area.
Alternatively, a clear close below the 1.2100 mark can result in a downtrend resumption below 1.2036. If that happens, support could initially develop around the falling restrictive line from November 2021 at 1.1980 and then near the 1.1900 number. Falling lower, the pair could re-examine the 2023 low of 1.1800 before heading for the channel’s lower boundary at 1.1740.
In a nutshell, GBPUSD has not exited the caution zone above 1.2275-1.2300 yet, whilst a rally above 1.2500 is still required to confirm a bullish reversal.
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