GBP/USD Plunges, More Downside Likely

GBPUSD resumed the downtrend after a short stop near the local low of September 2020 at 1.2675/1.2720. As a result, the medium-term trend continued, and the pound lost nearly 500 points in just 72 hours.

The RSI is moving close to a historic low of 12.78 on H4. The last time the indicator reached this mark was in 2019. At the moment, the RSI shows that the pound has been largely oversold, which can lead to a technical correction.

The moving averages of the Alligator Indicator on H4 and D1 are pointing down, thus generating a sell signal which comes in line with the current trend. On the daily chart, the quotes are moving at the levels of July 2020. There has been a 59% correction against the upward movement.


Outlook

Despite the strong oversold status of the pound, the bearish sentiment still prevails in the market due to the speculative behavior of traders who ignore this fact. Sooner or later, the market will develop a technical pullback or a full-fledged correction. However, this will not cancel the current downtrend. The levels of 1.2500, 1.2250, and 1.2000 can serve as a possible pivot point.

Comprehensive indicator analysis confirms a sell signal on the short-term, intraday, and medium-term periods due to the ongoing downtrend.