- GBP/USD remained depressed for the second consecutive session on Tuesday.
- Slightly oversold conditions on the 1-hourly chart helped limit deeper losses.
- The set-up favours bearish traders and supports prospects for further declines.
The GBP/USD pair added to the previous day's losses and remained under some selling pressure for the second consecutive session on Tuesday. Given the overnight break below a confluence support, comprising of a three-day-old ascending trend-line and 100-hour SMA, a subsequent fall below 200-hour SMA was seen as a key trigger for bearish traders.
The pair dropped to one-week lows during the early European session, albeit managed to find some support ahead of the key 1.2500 psychological mark. Slightly oversold conditions on the 1-hourly chart seemed to be the only factor that held investors from placing fresh bearish bets and extended some support to the major, at least for the time being.
Meanwhile, technical indicators on the 4-hourly chart have just started drifting into the bearish territory and support prospects for additional weakness. However, oscillators on the daily chart – though have been losing positive momentum – are yet to confirm the bearish outlook, warranting some caution before positioning for any further decline.
Hence, it will be prudent to wait for some follow-through selling below the 1.2500 mark. Bears might then aim to test 100-day SMA support near the 1.2425 region, which if broken will set the stage for an extension of the downward trajectory.
On the flip side, any attempted recovery might now confront a stiff resistance near mid-1.2500s (200-hour SMA). Some follow-through strength might prompt some short-covering move and lift the pair further towards the confluence support breakpoint, now turned resistance near the 1.2590-1.2600 region.
GBP/USD 1-hourly chart
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Technical levels to watch
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