GBP/USD Forecast: back towards the lows

13.05.2014 16:07:59

 Pound failure to overcome the 1.6900 level against the greenback, has left the pair exposed to the downside in the short term, at least until Wednesday employment data from the UK. Fundamentally, the overall situation in the kingdom is far more encouraging than that from Europe or the US, so better than expected data should see GBP regaining the bullish track.

But technically, particularly when it comes to the short term, the pair is under bearish pressure, as seen on the 4 hours chart: price has completed a pullback to the broken ascendant trend line and regained the downside from there, 20 SMA maintains a strong bearish slope above current price acting as dynamic resistance, and indicators had turned south below their midlines. 

A congestion zone of intraday lows and highs in the 1.6820 price zone needs to pass through to confirm another leg lower, looking for 1.6770 area. If buyers are unable to defend this last, 1.6720 is next.

On the other hand, mentioned 20 SMA is now around 1.6900 yesterday’s high, and only steady gains above may revert the negative tone of the pair, looking for an advance up to 1.6930/40 price zone.