GBP/USD Outlook: Deeper Pullback Seen On Firm Break Of 20DMA

Technical analysis of Forex market

Cable stands at the back foot in early Wednesday’s trading and pressures again pivotal 20DMA support (1.3648) which holds the action since late December.

Near-term bias remains negative following fresh weakness after multiple failures to clearly break 1.37 zone, although Tuesday’s action ended in long-legged Doji and signaling indecision. Daily studies point to downside risk as 14-d momentum broke into negative territory and stochastic is heading south.

Better than expected UK Services/Composite PMI figures for January so far did not provide any positive impact to sterling, keeping near-term focus shifted to the downside. Close below 20DMA is needed to generate negative signal and open way for further easing through Tuesday’s low/30DMA (1.3611) that would bring in focus pivotal supports at 1.3500 zone (Fibo 23.6% of 1.2675/1.3758/55DMA).

Res: 1.3689, 1.3710, 1.3758, 1.3768
Sup: 1.3611, 1.3573, 1.3519, 1.3502