The pound sterling was trading buoyantly last Friday. It managed to rise by 50 pips. Yet, it lost its gains shortly after. It is stuck in a narrow range today. It was hardly surprising as the macroeconomic calendar was uneventful last week. There were also no market-driving events. The start of a new trading week will also be sluggish. This time, the main reason is not the empty macroeconomic calendar.
Trading floors are closed today in the US on Memorial Day. Usually, when US traders are out of the market, trading activity is low, given that they have a significant impact on trading volumes. They boost the flow of financial capital in markets.
The pound/dollar pair approached the lower border of the resistance area of 1.2670/1.2720 during the corrective movement. The price convergence with the pivot point led to a drop in the volume of short positions. It also triggered a rebound followed by stagnation.
The RSI indicator is moving above the 50/70 lines on the 4H chart, which indicates a high possibility of an upward movement. On the D1 chart, it is located above the 50 lines. It signals an extended correction.
The Alligator indicator shows an uptrend on the 4H chart as the moving averages are pointed upwards. On the D1 chart, the indicator confirms the formation of a prolonged correction by changing the direction of MA lines.
Outlook
Despite the flat, a correction is unfolding in the market. After a short-term rollback, the upward movement may resume, pushing the pair at least to 1.2720. The trajectory may change drastically if the price consolidates above 1.2750 on the D1 chart. It will lead to the prolongation of a correction to new levels.
Alternatively, a correction may be over if buyers fail to break the resistance area of 1.2670/1.2720. A sell signal will appear if the price decreases below 1.2580 on the 4H chart.
The complex indicator analysis gives a buy signal on the short-term and intraday charts amid a correction. Because of the prolonged correction, technical indicators also generate buy signals on the medium-term charts.
