GBP/USD traded in a consolidated manner yesterday and today in Asia and Europe, staying between the 1.3365 and 1.3415 barriers. Overall though, the pair remains below the downside resistance line drawn from the high of January 14th, and thus, we would consider the short-term outlook to be negative.
A clear break below the 1.3365 barrier would confirm a forthcoming lower low and may pave the way towards the 1.3275 zones, marked by the inside swing high of December 21st. If the bears are not willing to stop there and decide to break lower, then we could see them pushing towards the 1.3200 territory, marked by the low of December 21st, or the 1.3173 zones, which acted as a temporary floor between December 8th and 20th.
Taking a look at our short-term oscillators, we see that the RSI rebounded and exited its below-30 zone, while the MACD, although below both its zero and trigger lines, shows signs of bottoming as well. Both indicators detect downside speed, which is in line with further declines, but the fact that they are turning up makes us careful over a potential corrective rebound before the next leg south.
In order to start examining a bullish reversal, we would like to see a clear break above 1.3525, a resistance marked by the high of January 26th. This could signal the break above the downside line taken from the peak of January 14th and may pave the way towards the 1.3605 barriers, the break of which could carry extensions towards the high of January 20th, at 1.3660, or the peak of January 17th, at 1.3690.
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