Even though the Bank of England raised the benchmark rate, the pound sterling slumped by 274 pips (2.17%). This inertial price movement supported by speculative activity led to the prolongation of the mid-term downtrend. As a result, the currency dropped to a level recorded in June 2020.
On the four-hour chart, the RSI technical indicator is moving in the lower area of 30/50. This fact points to traders’ great interest in short positions. On the daily chart, the indicator is hovering in the oversold area, thus reflecting the inertial movement.
The Alligator’s moving averages finished the intersection period with a decline on the four-hour chart. As a result, traders received a signal to sell the pound sterling. The Alligator indicator has been providing a downward signal for more than two months on the daily chart. Moving averages do not intersect each other.
In the same period, we see that the US dollar is recouping its recent losses. Since June 2021, the greenback has risen by 13% against the British pound.
Outlook
Yesterday, a rapid decline in the pound/dollar pair led to overheated short-selling. As a result, the pair stagnated near 1.2324. Notably, the market sentiment is still bearish. The pair is likely to resume falling after a short pause or an insignificant rebound. The level of 1.2250 may act as an intermediate support level. Meanwhile, a strong support level is located at the crucial psychological level of 1.2000.
In terms of the complex indicator analysis, technical indicators signal sell opportunities in the short-term, intraday, and mid-term periods.
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