GBP/USD breaches three-month channel
The Pound was driven by strong upside momentum against the Greenback on Monday, thus closing the session with a 94-pip gain. As a result, the pair breached the combined support of the weekly R1 and the upper boundary of a three-month ascending channel near 1.3952.
Shorter-term patterns, however, demonstrate that the strong movement north apparent during the previous week is starting to allay. Thus, the Sterling moving above the 1.3952 level might actually be a false breakout.
Technical indicators suggest that the pair could trade lower within the following days. This session, however, might still mark a slight up-move towards the weekly R2 at 1.4059.
Subsequently, the rate is expected to edge lower towards the 55– and 100-hour SMAs circa 1.39.
Shorter-term patterns, however, demonstrate that the strong movement north apparent during the previous week is starting to allay. Thus, the Sterling moving above the 1.3952 level might actually be a false breakout.
Technical indicators suggest that the pair could trade lower within the following days. This session, however, might still mark a slight up-move towards the weekly R2 at 1.4059.
Subsequently, the rate is expected to edge lower towards the 55– and 100-hour SMAs circa 1.39.
The Pound remained relatively stable against the US Dollar yesterday.
The pair edged lower during the first part of the day; however, the strong support of the bottom channel line and the 55-hour SMA circa 1.3930 stopped any attempts to edge lower. Subsequently, bulls took the upper hand and sent the Pound for a test of the most junior channel near 1.4030.
Meanwhile, converging technical indicators suggest that the bullish sentiment might be exhausted, thus allowing for a correction south within the following trading hours. This scenario would return the rate back in the senior channel towards the weekly R1 and the 55– and 100-hour SMAs near 1.9350.
In case the weekly R2 is breached, this high level is not expected to hold for long, as the Sterling should eventually be forced lower.