GBP/USD Remains Susceptible to Bear Flag Formation

British Pound Outlook: GBP/USD

GBP/USD extends the recent series of higher highs and lows to register a fresh weekly high (1.2812), but the exchange rate remains susceptible to a bear-flag formation as the 50-Day SMA (1.2893) reflects a negative slope.

GBP/USD Remains Susceptible to Bear Flag Formation

Keep in mind, GBP/USD trades within an ascending channel after failing to test the May low (1.2446), and the exchange rate may further retrace the decline following the US election as it extends the advance from the weekly low (1.2617).

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In turn, GBP/USD may negate the bear-flag formation should it show a limited response to the negative slope in the moving average, but a continuation pattern may unfold should the exchange rate struggle to extend the bullish price series.

With that said, the recent recovery in GBP/USD may turn out to be temporary if it fails to hold within the ascending channel carried over from last month, and the exchange rate may stage further attempts to test the May low (1.2446) should it respond to the negative slope 50-Day SMA (1.2893).

GBP/USD Price Chart –Daily

Chart Prepared by David Song, Strategist; GBP/USD on TradingView

GBP/USD approaches channel resistance as it carves a series of higher highs and lows, with a break/close above 1.2820 (38.2% Fibonacci extension) raising the scope for a move towards the 1.2900 (23.6% Fibonacci retracement) to 1.2910 (50% Fibonacci extension) region.
Next area of interest comes in around 1.3000 (38.2% Fibonacci retracement) to 1.3010 (61.8% Fibonacci extension), but lack of momentum to close above the 1.2710 (23.6% Fibonacci extension) to 1.2760 (61.8% Fibonacci retracement) zone may curb the recent advance in GBP/USD.
Failure to hold within the ascending channel may push GBP/USD back towards the monthly low (1.2617), with a break/close below 1.2540 (78.6% Fibonacci retracement) bringing the November low (1.2487) on the radar.

Additional Market Outlooks

Australian Dollar Forecast: AUD/USD Eyes Yearly Low Ahead of RBA

Gold Price Outlook Mired by Flattening Slope in 50-Day SMA

EUR/USD Struggles to Trade Back Above Former Support Zone

USD/CAD Defends Post-US Election Rally to Eye November High

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong

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