Technical Analysis – GBPNOK still neutral in medium-term, despite recovery

Anthony Charalambous, XM Investment Research Desk

GBPNOK’s bulls aggressively came on board, after the price fell to a new multi month low of 10.54 on July 30. They pushed the price above previous lows and into the Ichimoku cloud, before losing steam just below the 100-day simple moving average (SMA).

The momentum indicators although in the positive territory, still concur with the 50- and 100-day SMAs bearish picture, with the MACD decreasing above its red trigger line and the RSI nearing the 50-level.

If the bears continue the down move below 10.86, some stalling to the downside could first come from the 50-day SMA currently at 10.80. Next in line dropping lower is 10.77 which is the 23.6% Fibonacci retracement level of the down leg from 11.51 to 10.54. Falling out of the Ichimoku cloud, the price could revisit the multi month lows of 10.59, 10.55 and 10.54, once the swing low of 10.66 is taken out.

In the upside scenario, buying interest would need to pick up to raise the price initially above the 10.91 resistance, which is the 38.2% Fibo, before the bulls move above the 100-day SMA. If violated, the move further north would need to surpass a congested region, where the 11.016 resistance, 11.02 50.0% Fibo and 200-day SMA lie.

Summarizing, the medium-term picture remains neutral between 11.54 and 10.54, but a close below the 10.54 low would turn the short-term bias to bearish.