Technical Update - UK Gilt and GBPUSD closing in on strong resistance forming potential reversal pattern Technical Update - UK Gilt and GBPUSD closing in on strong resistance forming potential reversal pattern Technical Update - UK Gilt and GBPUSD closing in on strong resistance forming potential reversal pattern

Technical Update - UK Gilt and GBPUSD closing in on strong resistance forming potential reversal pattern

Forex 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

UK Gilt bounce seems to have hit resistance at the 0.618 retracement at around 108.59 forming a possible rising wedge pattern on daily time period.
If Gilt breaks below the lower rising trendline it could fuel a sell off down to support around 100. There is support at around 101.85.
RSI is still positive with no divergence indicating we could see another push higher possibly to the 0.786 retracement at 113.54. 200 daily SMA coming down will provide resistance.

Source all charts and data: Saxo Group

Medium- to longer term view: RSI still negative with no divergence supporting further bearish outlook. If Gilt closes the week below 105.21 it will have formed a Bearish Engulfing top and reversal candle.
If that plays out RSI is likely to break back below 40 resulting in selling pressure to return pushing Gilt towards the 100 level possibly lower.

GBPUSD is forming what looks like a rising wedge on daily time period, not yet confirmed though as there is still upside potential to strong resistance at 1.23. However, the 200 daily SMA will provide resistance.
If GBPUSD closes below the lower rising trendline there is short-term downside risk to 1.1530-1.1360. RSI is still positive testing its rising trendline. A close below the trendline in combination with a close below the price trend line will indicate a correction is playing out.
Support at 1.1767 and strong support at 1.1144.
A move above 1.2153 will test the strong resistance at around 1.23

Medium- to longer term: GBPUSD has broken the falling trendline and looks set to test the 1.23 resistance. However, RSI is still negative and there was no divergence on the trough in September indicating we could see lower GBPUSD unless weekly RSI can close above 60 threshold. .

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