GBPUSD Analysis 21 April 2020

Tuesday 21 April 2020

GBPUSD Analysis

By

Michael Brunette

Senior Fundamental Analyst 

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Good Morning, 

A quick follow up to last weeks' analysis for GBPUSD.

The news for Cable was positive during the previous week with Borris Johnson being discharged from hospital and as a result brought some stabality for the Pound. However as I mentioned last week it seems the initial recovery was met with an exaustive bullish sentiment, as investors looking to scalp on the upside to capture some profits did not hold on to their positions for very long.

However as anticipated the upside has so far been capped by a sensitive overbought RSI figure as few buyers are willing to enter the market when there is so much uncertainty around the economic situation, there is however more willingness to risk on the downside on the Pound as any bad news overshadows even the best news. So as a result the market is biased towards bearish sentiment.

The 1.24770 resistance level was briefly broken, by a bit more than anticipated which showed just how much confidence there was in the pound, but as soon as the RSI reached its overbought position, the doubt started to creep in and the bulls pulled back. Whereas that would have been a perfect level to short the Pound (around about the 1.26000 level).

But the Pound is now returning to its equilibrium price as I feel that it was overvalued. Look for upside pressure as it is now oversold and should retrace to the 1.24200 resistance and pull down further from there. It is important that the RSI remain in the sell zone (blue area) during this transition as it will confirm the bearish bias and open the door for potential profits to the downside.

The economic data and fundamentals for the Pound and Dollar will play a very important role in the coming days, so nothing is set in stone and the market is always up for a nice tease to test us, so don't be too hasty to make decisions based on the short term movements, but be ready to jump when the oppertunity is there.

Happy Trading

(The information provided is purely speculative and we do not accept any gains or losses which may result from our analysis)