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Tim Riddell, Research Analyst at Westpac, suggests that the daily momentum for GBP/USD pair has fallen sharply into areas considered to be “oversold” but is still failing, as yet, to display any sign of a turn in the recent down-trend.

Key Quotes

“The slump to the upper end off a 1.34-1.31(38.2%-50%) retracement zone soundly broke the uptrend from late’16. Minimal rebounds heighten the risk of extensions towards 1.3100. A close above 1.3620 is needed to alleviate downside risk.”

Weekly

  • Weekly indicators fell sharply over the past month and suggest that retracements of the rally to 1.4375-80 have further to run
  • Although 1.3400 (38.2%) has held (so far), the style of initial slippage and the turn in momentum suggest further declines into the 1.28-1.31 deep retracement zone”

Monthly

  • Monthly indicators have faltered and are poised to affirm the turn in trend. In so doing they would add weight to the bias for slippage towards 1.28 (61.8%)
  • Although the focus for 2018 may be downside retracements, broader patterns suggest that these will be part of a large consolidation off the spikes below 1.20″