#GBPUSD @ 1.17916 -imp levels: The cable is going through the process of inventory distribution for further downside.

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• The cable is going through the process of inventory distribution for further downside.
• For more downside, a breakdown of the RSI (14) below 40.00 could be optimal.
• EUR/USD could re-visit pandemic lows after violating the round-level support of 1.1700.

The pair currently trades last at 1.17916.

The previous day high was 1.1878 while the previous day low was 1.1717. The daily 38.2% Fib levels comes at 1.1817, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.1779, expected to provide support.

The GBP/USD pair is indicating a volatility squeeze as the asset is auctioning in an extremely narrow range in the early Tokyo session. The cable is struggling to cross the immediate hurdle of 1.1800. On a broader note, the asset is oscillating in a 1.1757-1.1838 range after a pullback move from a two-year low at 1.1717.

A formation of a bearish pennant chart pattern on an hourly scale is strengthening the greenback bulls. The above-mentioned chart pattern results in a sheer downside move after a downside break of the consolidation. Usually, a consolidation phase denotes the distribution of inventory from institutional investors to retail participants as the latter prefers catching a falling knife rather than selling the weakness.

The 20-period Exponential Moving Average (EMA) at 1.1800 is overlapping with the cable prices, which signals a consolidation ahead.

Also, the Relative Strength Index (RSI) is oscillating in a 40.00-60.00 range, which indicates the unavailability of a potential trigger for a decisive move. However, a dip below 40.00 by the momentum oscillator will activate a fresh downside impulsive wave.

The investing community will witness a vertical downside move if cable drops below the two-year low at 1.1717, which will drag the asset towards the 25 March 2020 low at 1.1638, followed by the 19 March 2020 low at 1.1472.

Alternatively, the pound bulls could regain their mojo and may drive the asset higher towards the August 3 low and high at 1.2135 and 1.2200 after violating the psychological resistance of 1.2000 decisively.

Technical Levels: Supports and Resistances

GBPUSD currently trading at 1.1796 at the time of writing. Pair opened at 1.1837 and is trading with a change of -0.35 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1.2079, 50 SMA 1.2078, 100 SMA @ 1.2343 and 200 SMA @ 1.286.

The previous day high was 1.1878 while the previous day low was 1.1717. The daily 38.2% Fib levels comes at 1.1817, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.1779, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1.1744, 1.165, 1.1583
• Pivot resistance is noted at 1.1904, 1.1971, 1.2065

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