GBPUSD tumbled to a fresh 20-month low of 1.2505 on Monday, creating a strong negative move below the previous multi-month bottoms. The bearish outlook was confirmed by the lower low and the pair looks ready to maintain and possibly extend its sizeable recent losses in the next sessions.
The momentum indicators are endorsing this view, despite today’s weak upside opening. The MACD oscillator holds below the trigger and zero lines, strengthening its movement, while the stochastic oscillator returned lower again near its oversold zone.
If the market continues the downward tendency and plunge below the 20-month low, the next hurdle for traders to have in mind is the 1.2360 support area, taken from the trough on April 2017. More losses could lead the price until the 1.2100 psychological level, registered on March 2017.
Alternatively, in case of an upside correction, the price could once more challenge the 1.2590 resistance and the 1.2690 barrier, identified by the latest lows. Even higher, the 20- and 40-simple moving averages (SMAs) in the daily timeframe could attract greater attention – at 1.2770 and 1.2850 respectively. Furthermore, cable could meet another obstacle around the descending trend line, which stands around the 23.6% Fibonacci retracement level of the downleg from 1.4375 to 1.2505.
To sum up, GBPUSD recorded five consecutive red weeks looking negative in the short- and the long-term.
Origin: XM
