GBPUSD has shifted from a neutral to a more bearish bias in the short term after a sharp break below the 50-day moving average (MA) on Wednesday.
Since January 24, the 50-day MA was acting as a strong support level but failed to hold any longer and prices broke below it at the 1.2391 level to fall close to another support level at 1.2252.
RSI is trending down and already in bearish territory below 50, which suggests that there is scope for more downside momentum.
If prices continue below support at 1.2252, then there is room to extend lower to revisit the January low at 1.1986, which was a 32-year low. A break below this level would indicate that the market has entered a bearish phase.
Alternatively, a recovery from current levels would see a bounce towards the 50-day MA support-turned-resistance level at 1.2391. This is a key level and breaching it could lead to an advance towards the February 24 high of 1.2570 and then the to the top of the recent range at 1.2705 (hit on February 2).
The short-term bias has shifted to bearish (below the 50-day MA), while the medium-term outlook is neutral as long as the market remains above 1.2252.
Origin: XM
