GBPUSD Poises For Short-Term Decline
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GBPUSD Poises For Short-Term Decline

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Azeez Mustapha

Updated:

Market Analysis – June 6

GBPUSD is poised for a short-term decline as the price approaches an overbought state. The RSI (Relative Strength Index) indicates that the market has been extremely bullish. A downward correction is therefore necessary, possibly giving more buyers the opportunity to enter from the discount zone.

GBPUSD Significant Zones

Supply Zones: 1.28940, 1.31420
Demand Zones: 1.22990, 1.20370

GBPUSD Poises For Short-Term Decline

Following the upward expansion that pushed GBPUSD into the premium zone, the market has remained in an overbought region. The 1.28940 price level has not yet been breached to the downside due to the strong bullish control.

During the price surge from the bullish order block from the discount zone, a sell-side inefficiency, specifically a Fair Value Gap (FVG), was created. This FVG is expected to be filled in the future when the price falls into the discount zone.
 
Following a BOS at $1.28270, the price surged into the 1.28940 supply zone. This caused a massive crash into the discount zone. According to the RSI (Relative Strength Index), the market flipped from being overbought to begin oversold in less than two months.

In favor of the bulls, a bullish order block that formed some months ago, propelled the prices upward, thereby causing the resumption of the bullish trend. As of now, the market is in the premium zone, with RSI indicating that the overbought zone is close by.

GBPUSD Poises For Short-Term Decline

Market Expectation

On the four-hour chart, the market’s order flow is currently bullish. However, a bearish divergence has formed on the four-hour chart. This occurred as a result of the price’s higher high formation while the RSI formed a lower high. Owing to this indication, a pullback, probably beyond $1.26810, is imminent.

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