GBP/USD technical analysis: Waits for a channel breakout [Video]

Christina Parthenidou XM

GBPUSD extended its recovery from a 5 ½-month low of 1.3570 marginally above the 1.3800 level and the 20-day simple moving average (SMA) on Monday but another obstacle has emerged.

The price is currently battling the surface of a descending channel and the 38.2% Fibonacci retracement of the latest downfall at 1.3829. Should efforts prove fruitful, the door would open for the 50% Fibonacci of 1.3900, while within breathing distance, the 50-day SMA at 1.3952 may cancel any corrections towards the 61.8% Fibonacci of 1.4032.

The upside reversal in the momentum indicators is endorsing the above bullish scenario, though downside corrections cannot be excluded as long as the RSI keeps hovering below its 50 neutral levels and the Stochastics flirt with overbought levels.

Failure to bounce above the trendline and the 1.3829 barriers could see another test near the 23.6% Fibonacci of 1.3730 and the 200-day SMA. Breaching this floor, the bears could take a rest near the 1.3668 support region before gearing down to meet the 1.3570 low. Beneath the latter, the channel’s bottom line could be the next pivot point around 1.3500.

Summarizing, despite its latest rebound, GBPUSD has yet to confirm a bullish bias, with traders waiting for a close above the descending channel to increase exposure in the market.

Author

Christina Parthenidou

Christina joined the XM investment research department in May 2017. She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics.

EUR/USD treads water near 1.1800 ahead of ECB rate decision

EUR/USD is keeping its range at around 1.1800 in the European trading hours on Thursday. The pair awaits the European Central Bank interest rate decision for fresh impetus after the Eurozone inflation declined well below the central bank's 2% target.

GBP/USD flirts with two-week lows near 1.3570

GBP/USD adds to Wednesday’s pullback and recedes to the area of two-week troughs well south of the 1.3600 level on Thursday. The firmer tone in the Greenback and the dovish hold from the BoE keep the British Pound on the defensive for now.

Gold resumes the decline, still below $5,000 post-ECB

Gold partially reverses its recent two-day rebound, facing fresh downside impulse and always below the key $5,000 mark per troy ounce. The stronger US Dollar continues to weigh on the precious metal, while declining US Treasury yields are expected to limit the decline somehow.