GBP/USD tries to restore lost positions
Morning outlook - GBP/USD tries to restore lost positions
The speech delivered by Theresa May about post-Brexit relationship with the EU on Friday, indeed affected value of the Pound.
Unfortunately, the effect was negative and the British currency just in one hour lost 79 points against the Dollar. Probably the best description of this situation was made by the German Foreign Minister who noted that the speech was vague and did not contain any concrete proposals.
Accordingly, the rectangle pattern that formed in the beginning of previous week sustained and is likely to sustain today as well. On the one hand, the rate feels pressure from the 55- and 100-hour SMAs together with the weekly PP at 1.3536 that pushes it to the top.
However, the expected target for today would be an area around 1.3585, but not the upper edge of the formation.
The speech delivered by Theresa May about post-Brexit relationship with the EU on Friday, indeed affected value of the Pound.
Unfortunately, the effect was negative and the British currency just in one hour lost 79 points against the Dollar. Probably the best description of this situation was made by the German Foreign Minister who noted that the speech was vague and did not contain any concrete proposals.
Accordingly, the rectangle pattern that formed in the beginning of previous week sustained and is likely to sustain today as well. On the one hand, the rate feels pressure from the 55- and 100-hour SMAs together with the weekly PP at 1.3536 that pushes it to the top.
However, the expected target for today would be an area around 1.3585, but not the upper edge of the formation.
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GBP/USD forms falling wedge
In accordance with expectations, a combined resistance formed by the 55-, 100- and 200-hour SMAs did not let the Pound to recover against the Dollar. In contrast, the pressure from those indicators formed a short-term falling wedge that most likely is going to break during this trading session.
In theory, the breakout should occur in the northern direction. But in this particular case, the upper side still remains protected by the above moving averages plus the monthly R2 at 1.3485, while the opposite direction is obstructed only by the weekly S2 at 1.3327. In addition to that, in larger perspective bears most probably are willing to push the rate back to the 1.3208 area.
In accordance with expectations, a combined resistance formed by the 55-, 100- and 200-hour SMAs did not let the Pound to recover against the Dollar. In contrast, the pressure from those indicators formed a short-term falling wedge that most likely is going to break during this trading session.
In theory, the breakout should occur in the northern direction. But in this particular case, the upper side still remains protected by the above moving averages plus the monthly R2 at 1.3485, while the opposite direction is obstructed only by the weekly S2 at 1.3327. In addition to that, in larger perspective bears most probably are willing to push the rate back to the 1.3208 area.
Although initially the currency pair managed to climb above the weekly PP at 1.3536 that was backed up by the 55- and 100-hour SMAs, but later it failed to strengthen this position and continue the surge. In result of the two hour downfall, the Pound lost 67 basis points against the Greenback, thus breaking the previously active rectangle pattern whose lower trend-line was represented by the monthly R2 at 1.3485.
During this trading session the Sterling might try to restore some of the lost positions, but this attempt is likely to be neutralized by the 200-hour SMA, which is located near the 1.3494 level. In additional to that, the northern direction also contains the previously mentioned 55- and 100-hour SMAs, which are lying along the upper edge of a supposed new descending channel.