GBP/USD set to drop towards the March/May base at 1.4017/06 – Credit Suisse

Despite the recovery on Friday, GBP/USD maintains bearish “reversal and outside days” already in place. Therefore, economists at Credit Suisse continue to see scope for a fall back to retest the “neckline” to the March/May base at 1.4017/06.

Resistance remains at 1.4203

“A clear break of 1.4082/77 see a small top confirmed to clear the way for a deeper setback to the ‘neckline’ to the March/May base at 1.4017/06.” 

“We now see scope for a move below 1.4017/06 to the uptrend from March 2020 at 1.3998, potentially even the 55 -day average at 1.3952 /42, but with this level expected to prove a better floor. Should a closing break instead be seen this would suggest the March/May base has been negated to reassert a broader sideways range.” 

“Resistance moves to 1.4171/76 initially, with the immediate risk still seen lower whilst below 1.4201/03. Beyond here remains needed to ease the threat of further corrective weakness for a retest of the 1.4238/49 highs.”