• A test of H&S formation has sidelined the retail participants.
• Declining 20-and 50-EMAs add to the downside filters.
• A drop below 40.00 by the RSI (14) will trigger the downside momentum.

The GBP/USD pair is displaying back and forth moves in a narrow range of 1.2048-1.2080 in the early Tokyo session. The cable has displayed a pullback move after dropping near the psychological support of 1.2000 on Friday. Pound bulls are failing to gain strength and are likely to remain on the tenterhooks.

A test of a Head and Shoulder formation on an hourly scale has kept the investors on the sidelines. Usually, the above-mentioned pattern indicates a bearish reversal after a prolonged positive move in the asset. The neckline of the chart pattern is marked from July 29 low at 1.2063.

The 20-and 50-period Exponential Moving Averages (EMAs) at 1.2090 and 1.2120 respectively are declining sharply, which adds to the downside filters.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating around 40.00 and may display a sheer downside move on its violation.

A downside move below Monday’s low at 1.2050 will drag the cable towards the psychological support at 1.2000, followed by July 16 low at 1.964.

Alternatively, the pound bulls could regain their mojo and may drive the asset higher towards the August 3 low and high at 1.2135 and 1.2200 after violating the 20-EMA at 1.2090.

GBP/USD hourly chart