GBPUSD continued its short consolidation phase marginally below the 20-day simple moving average (SMA), as it was unable to close decisively above the 1.3600 level over the past week.
The 23.6% Fibonacci retracement of the 1.4248 – 1.3411 downtrend is currently keeping the bulls under control around 1.3608 as the technical picture is providing little hope for a change in the downbeat market sentiment. Despite the quick rebound off the 30 oversold level, the RSI remains stuck below its 50 neutral mark, while the Stochastics have clearly shifted southwards. Likewise, the negative intersections between the shorter- and longer-term SMAs keep promoting the bearish trend from the top of 1.4248.
Traders may remain on the sidelines unless the price motivates fresh selling below 1.3540, shifting all the attention towards the new 2020 low of 1.3411. Moving lower, the decline could next take a breather around the 1.3280 barrier, which has been acting both as support and resistance at the end of 2020. If this fails to hold too, it would be interesting to see if the 1.3163 area, which encapsulates the 38.2% Fibonacci of the 2020-2021 upleg can come to the rescue.
Otherwise, a sustainable move above the 20-day SMA at 1.3626 may see a test near the 50-day SMA and the 38.2% Fibonacci of 1.3730. However, a more challenging obstacle is placed between the tentative descending trendline and the 200-day SMA at 1.3840. Note that the 50% Fibonacci is also located within these boundaries. Hence, any step higher from here may switch the focus towards the 61.8% Fibonacci of 1.3982, unless the 1.3912 bar stands tall once again.
Summarizing, the short-term risk is still tilted to the downside for GBPUSD, but traders may wait for a close below 1.3540 before they engage in more selling.
Forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors.
Recommended Content
Editors’ Picks
AUD/USD could extend the recovery to 0.6500 and above
The enhanced risk appetite and the weakening of the Greenback enabled AUD/USD to build on the promising start to the week and trade closer to the key barrier at 0.6500 the figure ahead of key inflation figures in Australia.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Federal Reserve might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.