GBPUSD has been moving sideways since the soft rebound on the 14-month low of 1.2660 on August 15, unable to fully recover losses made earlier this month. In the short-term, the market could maintain consolidation if the RSI keeps moving around 50 and the red Tenkan-sen line, as well as the blue Kijun-sen line, hold flat. Regarding the trend, this is likely to remain on the downside in the near-term as the 20-day simple moving average (SMA) continues to lose strength below the 50-day SMA.
An extension to the upside and above the 1.2900 key level could meet the area between the blue Kijun sen-line currently at 2936 and July’s low of 1.2956. Further up, resistance could run towards the 23.6% Fibonacci of the downleg from 1.4375 to 1.2660, around 1.3063, which is marginally above the 50-day SMA (1.3041), while even higher, steeper increases could also touch the 1.3200 round level where the market stopped at the end of May and July.
On the other hand, if the pair weakens, the red Tenkan-sen line which hovers around 1.2800 could provide immediate support ahead of the 1.2773 trough reached in August 2017. Even lower, the 1.2660 could attract a greater attention as any leg lower could worsen market’s bearish outlook, opening the way towards the 1.2560-1.2600 support area.
Regarding the medium-term picture, the bearish sentiment deteriorated after the downfall towards 1.2660 and only a move above 1.3200 could now help the market to return to neutrality.
To summarize, GBPUSD looks neutral in the short-term, while in the medium-term the picture is seen bearish unless the price breaks above 1.3200.
Origin: XM
