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GBP/USD Analysis / RSI Divergence for FX:GBPUSD by GabiDahdouh

Hello everyone, as we all know the market action discounts everything.

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The GBP/USD pair started to recover a bit after dropping last week from 1.34932 to 1.32932 a 1.48 % decrease in value, as risk from the new COVID-19 Variant “Omicron” threats the world.

The pair is trading in a downtrend channel and has bounced back from the lower edge which could give a good buying possibility for the next period of time.

We were able to spot a Bullish RSI divergence that could be an early sign for a reversal.

Possible Scenario for the market :

The Pair is trading at 1.33511 at the time of writing. with a good Bullish candle, but most likely this will be a correction wave for the pair and not a reversal yet. The pair is bouncing back from the lower edge of the downtrend channel and the first target will probably be the first resistance level located at 1.34400 where a battle will happen between the Bears and Bulls over control. But a Bullish RSI divergence has been spotted between the market and the indicator so keep an eye open.

If the Bulls were able to keep control then we will be seeing a further push that could lead the market value up to the resistance level located at 1.35652.

If the Bears were able to regain control then a drop will happen that could lead the price to the support level located at 1.32626

Technical Indicators Show :

1) The market is below the 5 10 20 50 100 and 200 MA and EMA (Strong Bearish sign)

2) The RSI is at 36.03 showing great weakness in the market and nearing the oversold zone, But a Bullish Divergence has been spotted which could be an early sign for a reversal in the trend.

3) The MACD is still below the 0 line indicating a Bearish market with a negative crossover between the MACD line and the Signal Line.

Weekly Support & Resistance points :

support Resistance

1) 1.3258 1) 1.3440

2) 1.3178 2) 1.3540

3) 1.3077 3) 1.3621

Fundamental point of view :

The GBP/USD is likely to move sideways over the near term even if the Bank of England (BoE) delivers a rate hike on Thursday, December 16.

The 2022 outlook for the UK economy appears to be challenging, amid an uneven economic recovery, Brexit frictions, and ongoing negotiations regarding the Northern Ireland protocol. These may somewhat explain the persistently low expectations of the UK’s ‘terminal’ interest rate, which makes the GBP vulnerable to a shift towards a potentially faster tightening cycle in other G10 currencies, especially the USD.

The GBP will probably also face a deteriorating current account deficit when the UK economy normalizes.

This is my personal opinion done with technical analysis of the market price and research online from Fundamental Analysts and News for The Fundamental point of view, not financial advice.

If you have any questions please ask and have a great day !!

Thank you for reading.

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