[DAILY NOTION] DailyForex - EUR/USD Forecast - Oct 20, 2020

The GBP/USD could end its rally as the price forms a head and shoulders pattern on the 4-hour chart. The price has yet to breach the neckline around the key psychological level at 1.2900 to confirm the reversal. If this happens, a sell-off may follow, as high as the chart formation.

The Head and Shoulders extends around 150 points, from 1.2900 to 1.3050. The price has yet to breach the dynamic 100 SMA support, also to confirm the sellers' dominance. Regarding the topic of the moving average, the 100 SMA is below the 200 SMA confirming the continuation of the downtrend. In other words, the support is likely to break further, and then again, the gap between the technical indicators narrowing to reflect slowing selling pressure and a potential bullish crossover.

The stochastic is still going downward to show that the bears are in control of the performance, but the oscillator is already approaching the oversold zone to indicate fatigue among the bears. A return to the upside could mean that buyers are about to take over and may take GBP/USD back to highs of 1.3050, a minor psychological sign.

And also the RSI has more room to move down, so sellers can stay in control of the performance for a longer period and have enough energy to maintain the downtrend.

Upcoming Trend Mover:

Forex market participants are focusing more on Brexit headlines not only now but since the 2016 European Union referendum, but they tend to become more frequent and intense as a big deadline approaches.

Source: https://www.dailyforex.com/for...