10, January 2017

GBP/USD (a 4-hour chart)

General overview

The pound started the week in the red. The Cable weakened as Hard-Brexit concerns returned to the market. The pound got a minor support from House Prices from Halifax which came in better than expected.

Current situation

Sellers continued to dominate on Monday. The pound gapped lower at the daily open and immediately extended its weakness towards 1.2200 handle. After touching the level the selling pressure faded and the cable started a consolidation phase. However, the consolidation did not last long, another wave of selling pressure led the GBP/USD pair towards 1.2100. A downward impetus faded a few pips above 1.2200, after touching the mark 1.2123 the spot bounced off and erased a minor part of its fresh losses. According to the 1 hours chart the sterling broke all its moving averages downwards. The 50-EMA turned lower while the 100 and the 200-EMAs were flat in the mentioned timeframe. The resistance lies at 1.2200, the support comes in at 1.2100.

MACD entered the negative area. If MACD remains in the negative territory, sellers’ positions will strengthen. The RSI indicator was holding near oversold levels, favoring a new move lower.

Trading recommendations

A bearish tone prevails in the 4 hours chart. Sellers may reach the level 1.2100 in the short-term, en route 1.2000. We cannot rule out the chance that the pair would try to recover to the 1.2200 – 1.2230 resistance region.