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Coronovarius is affecting GBP/USD testing the 200 SMA at the 4H chart
- Short term demand for GBP/USD limits the bearish stance
- Focus shifts towards the 1.2579 level
Coronavirus has been all over headlines across the globe, raising fears of further outbreak outside of Europe and Asia. The risk-off sentiment is gathering momentum and it seems that it will be around for a while. Unless thereās a clear sign from the global health authorities, of a cure, or way to contain the virus.
Concerns are rising across America, as tourists or travellers from Wuhan or Italy could encourage its advance. A sudden demand for safe-haven assets in the financial markets hurts the USD. However, inĀ Cableās structure, a rangebound has been established. So the limited moves could help to cap further gains in the aforementioned pair. Also, the 200 SMA is tested, acting as a dynamic resistance.
A critical moving average as the line in the sand for buyers
A demand zone is supporting GBP/USD in the short term, which is signaling that a strong barrier to the downside is limiting the bearish stance. Once the pair manages to break above the critical handle at 1.3000, eyes will be on the 1.3181 level to the first degree. Thus consolidating the range where it has been trapped.
However, if it clears out such resistance, the pair will point towards the 1.3306 level. Therefore challenging a critical barrier that capped advances at the end of 2019.
Will the demand zone give up?
On the flip side, Sterling will look forward to testing the support level at 1.2773, after finding resistance around the 200 SMA at the 4H chart. When the GBP/USD pair breaks below that support, the focus will shift towards the 1.2579 level. Furthermore, another leg lower could happen if that level gives up in favor of the sellers, pointing towards the psychological area at 1.2400. Technical oscillators are within positive territory, with the RSI indicator hovering above 50 and momentum rising above the equilibrium zone.
*OspreyFXĀ would like to state that traders should research extensively before following any information given hereby. Please read our Risk Disclosure for more information.