GBPUSD is marking the fourth day of declines near the 20-day simple moving average (SMA) which could be a make-or-break point in the coming sessions given the upside reversals around that line during the past three months.
The 23.6% Fibonacci level of the 1.2674 – 1.4235 up leg is in the same position at 1.3867, giving more importance to the region and therefore suggesting that any violation here could see another negative extension.
That said, the technical signals have yet to switch to the bearish side as the RSI remains above its 50 neutral level, despite its recent weakness, and the red Tenkan-sen line continues to flatten above the blue Kijun-sen. As regards the market trend, the upward-sloping 20- and 50-day SMAs keep the risk positive for now.
A significant step below the 20-day SMA could motivate additional selling, likely sending the price towards the 50-day SMA and the 38.2% Fibonacci of 1.3639. Lower, the 50% Fibonacci of 1.3455 could be a crucial barrier since any violation at this point would smash confidence in the medium-term uptrend.
On the flip side, a bounce higher could retest the red Tenkan-sen line at 1.4030 ahead of the key 1.4135 resistance area. If the bulls manage to overcome the top of 1.4235, the next stop could occur somewhere between 1.4350 and 1.4380.
In brief, GBPUSD is currently testing a potential pivot point around 1.3867. Failure to hold above this level could set the stage for a more aggressive sell-off.