GBPUSD erased last week’s upward correction and slipped slightly into the 1.2700 region, charting a lower high around the 50-day simple moving average (SMA) in the short-term picture. The recent bearish move follows the creation of a lower low at 1.2760 and hence increases the case of a downtrend.
The 200-day SMA that has been flattening around the 1.2710 level for some time could be the next price to claim as the bearish bias is still intact. The MACD continues to expand to the downside and below its red signal line, the RSI has shifted back south within the bearish area, while the red Tenkan-sen line keeps decelerating below the blue Kijun-sen.
A supportive trendline, which is part of an ascending channel, is located marginally below the 200-day SMA and the 38.2% Fibonacci level of the 1.1409-1.3481 upleg. Should it fail to hold, the sell-off could gain new legs towards the 50% Fibonacci of 1.2445, confirming the start of a downtrend. Moving lower, a break below June’s low of 1.2250 would change the medium-term outlook from positive to neutral.
If the bulls retake the reins, they will push harder to break the wall around the 50-day SMA and the 23.6% Fibonacci of 1.2992. In case the rally continues, it would be interesting to see if the broken long-term trendline stretched from the 2015 highs and the surface of the channel can again act as resistance within the 1.3080-1.3200 zone.
Summarizing, GBPUSD maintains a bearish short-term bias and a decisive close below 1.2700 is expected to attract new sellers. In the medium-term timeframe, the outlook remains positive as long as the price trades above 1.2250.
Origin: XM
