GBP/USD: Overbought conditions to cause a temporary drop

GBP/USD has been extending its gains amid an upbeat market mood. Meanwhile, Tuesday's 4-hour chart is pointing to overbought conditions, which may cause a temporary pause, FXStreet’s analyst Yohay Elam briefs.

Key quotes

“The Relative Strength Index on the 4-hour chart is above 70 – indicating overbought conditions, while momentum remains positive and the 50, 100, and 200 Simple Moving Averages remain well below the current price. That implies a temporary correction.”

“The fresh 2020 high of 1.3440 is the immediate resistance line. It is followed by the December 2019 peak of 1.3510, followed by 1.3610, last seen in May 2018.” 

“Support awaits at 1.3360, a temporary cap on the way up, followed by 1.33, the weekly low. The next lines to watch are 1.3265 and 1.3180.”