- A back and forth move of cable in a range of 1.3093-1.3203 is indicating a volatility contraction.
- Pound bulls are firmer above 100-period EMA, which adds to the upside filters.
- The formation of a head and shoulder pattern is indicating a strong upside move.
The GBP/USD pair is oscillating in March 17’s intraday range of 1.3093-1.3203. The cable’s performance has remained subdued in the Asian session and is likely to continue to get contracted until a decisive move.
On an hourly scale, the cable is going through some significant reversal setups. The asset is forming a head and shoulder pattern that signals a bullish reversal. Usually, a head and shoulder formation denote a sustained inventory distribution from institutional investors to retail participants. It is worth noting that at the end of the right shoulder, there is a contraction in the size of ticks. This indicates a volatility contraction, which is followed by an expansion in the size of the ticks and volumes after a decisive breakout.
The Relative Strength Index (RSI) (14) is juggling in a 40.00-60.00 range, which signals a consolidation move.
The asset has been stabilized above 100-period Exponential Moving Average (EMA), which adds to the upside filters.
A movement towards the upside will be witnessed once the asset will violate the range contraction on the upside. A decisive move above the round level of 1.3200 will drive the pair towards March 6 high at 1.3246, followed by March 3 low at 1.3318.
On the flip side, bears can dictate the prices once the cable skids below March 18 low at 1.3111, which will drag the pair towards March 16 low at 1.3036. Breach of the latter will send the pair towards psychological support at 1.3000.
GBP/USD one-hour chart
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