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GBP/USD Price Analysis: The test of a 20-day exponential moving average (EMA) during a slow correction indicates a new buying opportunity
The Cable has moved sideways prior to the Fed's interest rate decision. After the breakout of a symmetrical triangle, a modest corrective move presents a new purchasing opportunity. For a fresh rally, the RSI (14) must ascend into the bullish zone.
The GBP/USD pair is demonstrating a mediocre performance during the Asian session as investors await fresh clues from the Federal Reserve's (Fed) interest rate decision. After retracing from a fresh six-month high at 1.2444, the Cable is languishing around 1.2350.
In the meantime, the US Dollar Index (DXY) is auctioning with a balanced profile as market sentiment has become subdued in advance of Fed policy. Two consecutive months of decelerating inflation have increased the likelihood that Fed head Jerome Powell will choose for a rate cut.
The GBP/USD pair has gradually corrected towards the 20-period Exponential Moving Average (EMA) at approximately 1.2340. Earlier, the Cable broke out of the Symmetrical Triangle chart pattern, indicating an increase in volatility. Therefore, a modest reversal in an upward trend gives market players with a new buying opportunity.
Meanwhile, the Relative Strength Index (RSI) (14) has fallen into the area of 40.00-60.00, indicating that bullish momentum is dormant.
For a confident rebound, the Cable needs to surpass Wednesday’s high of about 1.2379, which would drive the asset toward Tuesday’s high at 1.2444, followed by the psychological resistance around 1.2500.
In contrast, a decline below Friday's low of approximately 1.2200 will push the asset toward the December 7 low of 1.2107. A breach of the latter will expose the major to more losses towards the high of November 15 at 1.2029.
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