- The momentum oscillator RSI (14) seems losing the downside momentum.
- Pound bulls have seen a minor pause after a six-day losing streak.
- A pullback towards 1.2500 will activate responsive sellers.
The GBP/USD pair is displaying a minor pause from 1.2411 after a sheer downside move. The cable is experiencing some signs of cushion after a six-day losing streak however, the overall context is still extremely bearish.
A bullish divergence formation on an hourly scale has made the pound bulls hopeful. The asset is continued with its lower high lower low formation, however, the momentum oscillator Relative Strength Index (RSI) shows a loss of downside momentum after forming higher lows and has raised the odds of a reversal.
It is critical to note that a bullish reversal is empowered with wider bullish ticks, which are not visible on the chart. Therefore, it’s too early to claim it a reversal but a pullback towards the psychological resistance of 1.2500 looks likely. The asset is expected to face barricades near the supply zone placed in a range of 1.2500-1.2600.
The 20- and 50-period Exponential Moving Averages (EMAs) at 1.2477 and 1.2534 respectively are scaling lower, which adds to the downside filters.
Should the asset test the supply zone in a range of 1.2500-1.2600, responsive sellers may attack the cable, which could drag the major towards Thursday’s low at 1.2411, followed by the 19 June 2020 low at 1.2342.
On the flip side, pound bulls could regain control if the asset oversteps the supply zone confidently. This will drive the asset towards the round level resistance and Tuesday’s high at 1.2700 and 1.2773 respectively.
GBP/USD hourly chart
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