GBPUSD: Bearish engulfing pattern shows signs of extended downtrend – SocGen

By FXStreet FXStreet (Delhi) – Research Team at Societe Generale, suggests that after having formed a bearish engulfing last week, GBP/USD shows signs of continuation in downtrend.

Key Quotes

“Undercurrent remains weak as highlighted by weekly MACD which is sustaining in negative territory and below its trigger line. The down move is expected to remain choppy but to continue towards lows formed earlier this year and the multiyear channel limit at 1.45.”

“If we drop down to daily chart, the pair has recently confirmed a head and shoulders pattern and is currently testing a descending channel limit at 1.4860/1.48. Near term upside, if any, is likely to find resistance at neckline of the formation near 1.5110/70 while October highs of 1.5530 will be an important hurdle. Daily indicator (here RSI) is still below its resistance line which suggests more likelihood of further correction. A move below 1.4860/1.48 will mean persistence in downtrend towards 1.45.”
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Source:: FX Street