GBP/USD: Oversold conditions to halt the slump

GBP/USD stays on the back foot around 1.2940 while Wednesday's 4-hour chart is pointing to significantly oversold conditions. Therefore, the cable is set to pause the fall but probably only temporarily, Yohay Elam, an analyst at FXStreet, reports.

Key quotes

“The Relative Strength Index on the 4-hour chart is well below 30 – indicating considerable oversold conditions. That implies a bounce, potentially before the next move down. GBP/USD is trading below the 50, 100, and 200 Simple Moving Averages and momentum remains to the downside.” 

“Support awaits at 1.2905, a separator of ranges from July, followed by 1.2840, a stepping stone on the way up around the same time, and 1.2775, a cushion from early in the summer.”

“Some resistance is at 1.2950, another separator of ranges from two months ago. It is followed by 1.30, a psychologically significant level that provided support in August. Further above, 1.3050 also kept the pair from falling last month.”