GBPUSD Testing Key Support at 1.2175: Will Oversold Conditions Trigger a Correction?

GBPUSD Testing Key Support at 1.2175: Will Oversold Conditions Trigger a Correction?

GBPUSD is testing key support at around 1.2175. RSI is around 20 i.e., indicating extremely oversold  but there is no divergence suggesting lower GBPUSD levels are likely. However, a correction should be expected. We rarely see these long periods of trends as we have now seen in GBPUSD (down trend since mid-July) without a larger correction

If RSI is breaking back above its falling (blue) trendline expect a correction to occur. A move up to test the 200 daily Moving Average from beneath is quite common after breaking below.

However, the 1.2175 support is not the strongest support level meaning GBPUSD is likely to continue (after a likely correction) its downtrend towards 1.20 level. 
21, 55  and 100 Moving Averages are alle declining and the 200 is very close to showing an underlying bearish trend and sentiment


Medium-term GBPUSD is in a confirmed bearish trend after it closed last week below 1.23.
Weekly RSI is currently below 40 threshold and if closing the week below it will just add to the bearish picture with medium-term downside potential to around 1.18.

To reverse the bearish trend short term a close above 1.2550 is needed. To demolish the trend i.e., put it on pause a close above 1.2425

 

 

 

 

GBPUSD Testing Key Support at 1.2175: Will Oversold Conditions Trigger a Correction?

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