GBPUSD breaks below key technical support level
British Pound/US Dollar (GBPUSD) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, GBPUSD ended the week 0.5% higher at 1.2165 after losing 57 pips (-0.47%) today on low volume. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 1.2186, GBP/USD confirmed its breakout through the prior session low after trading up to 24 pips below it intraday.
Daily Candlestick Chart (GBPUSD as at May 22, 2020):
Friday's trading range has been 72 pips (0.59%), that's far below the last trading month's daily average range of 114 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for GBPUSD.
Two candlestick patterns are matching today's price action, the Bearish Short Candle and the Black Candle which are both known as bearish patterns.
Prices broke below the key technical support level at 1.2166 (now R1), which is likely to act as resistance going forward. The last time this happened on May 15th, GBPUSD actually gained 0.75% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Selling could speed up should prices move below the nearby swing low at 1.2076 where further sell stops might get triggered.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Decisive Down Move" stand out. Its common bearish interpretation has been confirmed for GBP/USD. Out of 300 times, GBPUSD closed lower 54.67% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 50.33% with an average market move of -0.14%.
With three of the other Major FX Pairs closing higher and three closing lower today, the winners of the day are USDCAD surging 0.33% and USDCHF gaining 0.08%. On the flipside the worst performers have been EURUSD closing -0.44% lower and AUDUSD losing -0.43%. Looking at the Minor FX Pairs and Crosses, the winners of the day have been USDCZK surging 1.09% and USDHUF closing 0.9% higher. The worst performers of the day have been USDMXN tanking -0.58% and SGDHKD closing -0.51% lower. Read more