GBP/USD over-sold

GBP/USD seems to have taken an extended dip and has touched its target at 1.5325 level and will now look to take some due retrace. The retrace seems to be an extended one after some sharp dip by GBP/USD. The very first retracement target will be towards 1.5500 level and aggressive traders might look to sell GBP/USD around that level. Break above 1.5500 level will take GBP/USD above 1.5700 level and around that level is mostly traders will be looking to sell GBP/USD in long term downward trend for targets below 1.5500 level.

Looking at the moving averages used in daily charts, the market is well below all the three moving averages and thus suggesting that the market is very much in selling trend. Once the market look to take some retrace, it seems to initially target 1.5600 level towards its short term moving average and once it manages to break above the short term moving average, it will look to touch medium term moving average which seems possible around 1.5775 level.

The main indicator to consider at the moment is the RSI which is currently at 20 in daily charts and is ready to push GBP/USD for a quick retracement and open up some space to resume downwards trend.

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