11, January 2017

GBP/USD (a 4-hour chart)

General overview

The pound stabilized on Tuesday after Theresa May’s recent remarks. Moreover, hard-Brexit concerns continue weighing on the investors’ sentiment. Investors’ attention now turns to Manufacturing Production and Industrial Production releases.

Current situation

Bears kept the market in control tightening their grip. After a brief consolidation in the Asian session the pound extended its weakness on Tuesday. Sellers pushed the pair lower and reached 1.2100 with London opening. The spot was in a consolidation phase ahead of the NY session opening. The price stays well below the moving averages in the 4 hours chart. The moving averages maintained their bearish slope. The resistance lies at 1.2200, the support comes in at 1.2100.

The technical indicators turned lower. The MACD histogram decreased which indicates the sellers’ strength. The RSI indicator remained within oversold levels.

Trading recommendations

The pound is short term oversold and may reverse some losses. We do not rule out a minor recovery to 1.2200 which is a good chance to open short positions. Despite the oversold readings we do not see any signs the pair may change its current course any time soon. A move below 1.2100 will return sellers in the driver’s seat pushing the GBP/USD pair to 1.2000.