Title: GBP/USD Price Analysis: Pound bulls test H&S neckline around 1.2050

August 8, 2022 01:37 AM ET

By: AnalysisWatch

The GBP/USD currency pair is trading in a narrow band of 1.2048-1.2080 at the start of Tokyo trading. Cable is showing a pullback after falling near the psychological support of 1.2000 on Friday. Pound bulls failed to gain strength and are likely to remain in uncertainty.

A test of the head and shoulders formation on the hourly chart is keeping investors on the sidelines.

Normally, the above formation indicates a bearish trend reversal after a sustained positive move in the asset. The boundary of the neck of this formation on the chart is the July 29 low at 1.2063.

The exponential moving averages (EMAs) with 20 and 50 year timeframes at 1.2090 and 1.2120 respectively are strongly bearish, reinforcing the downward filters.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating around the 40.00 level and could indicate a pure downward move if broken.

A move down below Monday's low at 1.2050 will pull cable towards psychological support at 1.2000, followed by the July 16 low at 1.964.

Alternatively, a break of the 20-EMA at 1.2090 could see sterling bulls regain momentum and direct value towards the August 3 lows and highs at 1.2135 and 1.2200.