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Technical Update - Will GBPUSD test parity or rebound higher? EURGBP rejected at key resistance, will it have another go? Technical Update - Will GBPUSD test parity or rebound higher? EURGBP rejected at key resistance, will it have another go? Technical Update - Will GBPUSD test parity or rebound higher? EURGBP rejected at key resistance, will it have another go?

Technical Update - Will GBPUSD test parity or rebound higher? EURGBP rejected at key resistance, will it have another go?

Forex 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

GBPUSD seems to collapse trading below 1985 levels. will it test parity? EURGBP rejected at 0.9290 but indicators point to higher levels -  0.95 next? 


GBPUSD continued its collapse this morning to 1.03 before being lifted by buying. GBPUSD is in uncharted territory i.e., at levels not seen when we have data. However, it touched the 1.382 projection of the Q1 2020 to Q2 2021 bull market. Depending on where GBPUSD ends the day today it could indicate an exhaustive move.

If GBPUSD closes around current levels (around 1.07) or higher it would have formed a Hammer candle (Small body with lower shadow at least 2-3 times as long as the body and no or very short upper shadow) on the daily chart. It would be an indication of a bottom and reversal that can initiate a rebound to around 1.1065 i.e. the 0.382 retracement of the past two months of sell-off.

BUT market is still open and the picture can change.
If GBPUSD at the end of today’s price range – or lower – more down side is like. Parity would be in sight.
Weekly RSI has broken its rising trend and made a new low supporting a continued bearish outlook.

Source: Saxo Group
Source: Saxo Group
EURGBP spiked to the 1.764 Extension  of the Q1-Q2 2022 uptrend just a few pips from the Q3 2020 peak at around 0.9290 and has since collapsed. EURGBP could be forming a shooting star on the daily chart if it closed a current levels or lower. (If closing at same price as the opening price it will be a Gravestone Doji). If that picture is drawn it could be an exhaustive move and a correction is in the cards. A correction tht could take EURGBP down to 0.88-0.87.
However, if market closes at the upper end of today’s price action – or higher the uptrend is likely to continue. If closing above 0.9290 2020 peak at around 0.95 is next level to look for.
There is no divergence on RSI on both Daily and Weekly indicating higher levels are likely .  
Source: Saxo Group
Source: Saxo Group

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