Despite the fact that British economic reports were rather moderately optimistic, the pound generally remained stagnant on Friday. This is despite the fact that the euro saw a minor rebound. The UK reported an upward revision on its industrial output data, and the pace of growth ultimately remained unchanged. Now one might think that this, especially after a firm decline, should have been enough for the pound to rise. But apparently, a belated reaction awaits us since today the economic calendar is basically empty. So the pound will probably try to catch up with the euro.
The GBP/USD pair dropped below the level of 1.2200 for a while, but at this time, there was a decline in the volume of short positions. As a result, the week ended with a two-digit doji candle, indicating a slowdown in the downtrend.
On the four-hour chart, the RSI indicator is moving in the lower area of 30/50. This shows that the bearish sentiment remains in force, despite the formation of a doji candle pattern.
On the same time frame, the Alligator's MAs are headed downwards, which corresponds to the direction of the pair's movement starting from November 6.
Outlook
In order to extend the downward movement, the price must stay below the level of 1.2200. In this case, we can expect the pair to fall towards the level of 1.2150.
The bullish scenario suggests that GBP/USD may recover a part of its value if we consider its local oversold condition in the short-term time periods. The level of 1.2200 can act as support, and if the price stays above this level, the pound may gradually recover and climb above the value of 1.2270.
Complex indicator analysis provides a mixed signal in the short-term timeframe due to the doji candle pattern. In the intraday period, indicators point to a downward cycle.
