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19 Oct 2020

GBP/USD Price Analysis: Strong intraday positive move stalls ahead of a descending trend-line

  • GBP/USD caught some aggressive bids on Monday and surged past the 1.3000 psychological mark.
  • The technical set-up favours bullish traders, though warrant some caution before placing fresh bets.
  • Sustained move beyond a one-week-old descending trend-line needed to confirm any further gains.

The GBP/USD pair added to its strong intraday gains and refreshed daily tops, around the 1.3025 region during the early North American session.

Given that the pair last week attracted some dip-buying near the 1.2865-60 horizontal zone, a sustained move beyond the 200-period SMA on the 4-hourly chart was seen a key trigger for bullish traders. The strong intraday positive momentum was further supported by bullish oscillators on hourly charts.

Meanwhile, technical indicators on the daily chart have just started moving into the positive territory, albeit are yet to gain any meaningful traction. Hence, it will be prudent to wait for some follow-through buying beyond a one-week-old descending trend-line resistance before positioning for any further appreciating move.

The mentioned hurdle is pegged near the 1.3025-30 region, above which bulls are likely to aim back towards monthly swing highs, around the 1.3080 supply zone. The momentum could then push the GBP/USD pair further beyond the 1.3100 mark, towards testing the next major hurdle near the 1.3160 horizontal zone.

On the flip side, the 1.2940 region (200-period SMA) now seems to protect the immediate downside. failure to defend the mentioned support might prompt some technical selling and turn the pair vulnerable to slide back to test sub-1.2900 level. That said any subsequent fall might still find decent support near the 1.2865-60 region.

GBP/USD 4-hourly chart

fxsoriginal

Technical levels to watch

 

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