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Technical Quick Note - Bearish Sterling scenario seems more and more likely to play out Technical Quick Note - Bearish Sterling scenario seems more and more likely to play out Technical Quick Note - Bearish Sterling scenario seems more and more likely to play out

Technical Quick Note - Bearish Sterling scenario seems more and more likely to play out

Forex 2 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  The bearish scenario for Sterling outlined in previous Technical Update seems more and more likely to play out. https://www.home.saxo/content/articles/forex/technical-analysis-gbpusd-eurgbp-03022023
GBPUSD could soon test key support at 1.1840. EURGBP likely to break back above 0.89 aiming for higher levels.

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GBPUSD failed yesterday to close back above 55 Moving Average. That is the second time after breaking the lower rising trendline and below the 55 SMA. 
GBPUSD seems set to test key support at around 1.1840. 100 and 200 daily SMA’s will provide some support here.  A close below 1.1840 will confirm a Double Top pattern unfolding with downside potential to around 1.1145 support illustrated by the two vertical arrows.
RSI is bearish testing its rising trendline. A break below followed by a move below 40 threshold will support the very bearish GBPUSD scenario.
For GBPUSD to demolish the bearish picture a close above 1.2445 is needed.

 

Source all charts and data: Saxo Group

EURGBP ran out of steam just a few cents below resistance at around 0.8990. However, EURGBP seems to resuming uptrend. A break back above 0.8900 will confirm that.
If that scenario plays out EURGBP is likely to have the power to break the 0.8990 moving to next resistance at around 0.9066.
Key support at 0.8720 which is likely to be tested if EURGBP closes below 0.8800.

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