GBP/USD’s retracement turns sideways; nears ascending trendline.
GBP/USD looks to be a bit flat around the 1.3010 level, which is the 38.2% Fibonacci retracement of the up-leg from 1.2194 to 1.3514. With the recent lower highs and higher lows, the pair could extend its sideways nature further into the Ichimoku cloud and possibly down towards the lower band of the cloud and the supportive trendline.
The technical indicators suggest that directional momentum has evaporated but favour a very short-term negative move. The MACD is below its red trigger line and has slipped below the zero level, while the RSI hovers slightly underneath its 50 level. Also backing the very short-term negative view is the downward sloping Tenkan-Sen line. Nevertheless, traders need to be aware of the bigger positive move displayed by the 50- and 100-day SMAs.
Steering lower, an initial key support area from the low of 1.2904 to the 50.0% Fibo of 1.2856 – which also encapsulates the supportive trendline – could challenge the bears. Diving down, the pair may test the 100-day SMA and nearby trough of 1.2768. Surpassing this, a strengthened level at the 1.2700 level, where the 61.8% Fibo and 200-day SMA reside, could attract traders’ attention.
Alternatively, successfully pushing above the obstacles at the 1.3010 area, the 1.3117 resistance overhead could apply some downside pressure ahead of the 23.6% Fibo of 1.3203. Climbing up, the 1.3283 swing highs from the end of 2019 may halt further advances towards the 1.3381 resistance and the nineteen-month peak of 1.3514.
Overall, the short-term bias is neutral-to-bullish and if the supportive trendline holds, the pair would realign with the medium-term positive outlook.
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