GBPUSD could be due for an upside correction following the stabilization near the key 1.3670 support region.
Even though the new bearish cross between the 20- and 50-day simple moving averages (SMAs), which is the first since September, suggests the continuation of the short-term downtrend, the RSI is regaining ground towards its 50 neutral level. Meanwhile, the Stochastics have already set up a bullish cross below the 20 oversold mark, signaling a pickup in positive momentum.
The 1.3755 – 1.3777 area has been rejecting upside movements over the past few sessions, therefore a clear breach of that wall may bring new buyers into the market, likely sending the price towards the upper line of the descending channel around 1.3860, where the 50-day SMA is also positioned. Running higher, the bulls may take a rest within the 1.3900 – 1.3950 area before a tougher battle takes place near the 1.4000 hurdle. Additional gains from here would push for an uptrend resumption beyond 1.4135.
Otherwise, a decisive close below the floor of 1.3670 may stretch towards the bottom of the channel, likely charting a new lower low within the 1.3600 – 1.3560 region. Traders will also pay great attention to the crucial zone of 1.3500 – 1.3480, where any violation would put the price back below the 2019 and 2020 highs, neutralizing the long-term outlook.
In brief, GBPUSD may attempt to recover some losses in the near term, although the trend signals remain bearish. For a meaningful rebound, the pair should cross above the downward-sloping channel and the 1.3870 level.
In fundamentals, UK monthly GDP growth figures will be out today at 08:30 GMT.
Origin: XM
