GBP/USD: Downtrend appears mature – Westpac

Divergence in daily momentum is a clear risk now and could signal a topping pattern above 1.3055 for GBP/USD pair, according to Tim Riddell, Research Analyst at Westpac.

Key Quotes

“Dips need to be contained if GBP uptrend is to continue”

“Although recent gains could extend, within the context of retracements towards 1.34, a stumble below 1.2960 could be enough to reverse recent gains”

“Weekly

• Weekly momentum, though still solid, is also displaying divergence. This increases the risk that current forays above 1.30 are redefining range/retracement resistance
• However, the shift in longer term patterns suggests that a base may have formed. A weekly close below 1.29 may imply failure, but within a range trading context”

“Monthly

• The maturing of the downtrend from 1.70’s is still the key long term development and monthly momentum remains supportive, suggesting that a base is forming
• Recent rebounds may well prove to be corrective, but downside flushes could well confirm that the downtrend is over and that slippage may be relatively contained”