GBP/USD: Quiet and Directionless Phase Likely to Precede Fresh Weakness

Technical analysis of Forex market

Cable trades in a quiet and narrow-range mode in European session on Friday, with directionless action (long-legged Doji candles in past two days) extending into fourth consecutive day.

Friday’s action remained unchanged on negative news as PM Johnson’s Conservatives lost two parliamentary seats, though the news are likely to add to existing problems with Johnson’s Partygate scandal, strike on UK railway and the red-hot problem with surging cost of living that resulted in a record low consumer confidence and prompted British consumers to cut back on shopping.

Technical picture on daily and weekly charts remains very bearish, adding to limited prospect for stronger recovery and keeping the risk shifted to the downside.

Bears look for a break of pivotal supports at 1.1933/30 (last week’s low / Oct 2016 low) which would open way for retest of pandemic spike low at 1.1409 (Mar 2020) and risk deeper fall on violation of the latter.

Daily Kijun-sen, which capped the action in past four days, offers strong resistance at 1.2300 and immediate bias is expected to remain bearish while the action continues to hold below this level, however, stronger signal of recovery would require acceleration and close above 1.2386/1.2406 (Fibo 61.8% of 1.2666/1.1933 bear-leg / June 16 lower top).

Res: 1.2300; 1.2386; 1.2406; 1.2493
Sup: 1.2210; 1.2160; 1.2114; 1.2045

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