GBP/USD to suffer a susbtantial drop on a break below 1.1840 – SocGen

GBP/USD has formed a potential double top after failing to cross 1.2450. Economists at Société Générale expect to see a down move towards 1.1840, with a break below here opening up more losses.

Double top, watch neckline at 1.1840

“GBP/USD has failed to reclaim December peak of 1.2450 on second attempt forming a double top. Daily MACD has started posting negative divergence denoting receding upward momentum.” 

“A short-term pullback is not ruled out; neckline of the formation at 1.1840 is crucial support. Break can lead to an extended down move towards 1.1640 and target of the pattern at 1.1250.”  

“Short-term price action could remain range-bound. A move beyond 1.2450 would be essential to affirm next leg of uptrend.”