GBPUSD Extends Negative Move, Downfall Could Pause In Short-Term

Technical analysis of Forex market

GBPUSD has been erasing gains since the peak at 1.3297 on September 20 to fall back into the Ichimoku cloud. Yet, the RSI indicates that the downfall may stall as the indicator is near its 50-neutral mark, while the Stochastics suggest that a reversal to the upside is also possible; the green %K line has crossed above the red %D line in oversold area below 20.

A leg higher and above the 50% Fibonacci of the downleg from 1.3361 to 1.2660, the price could meet resistance around the 61.8% Fibonacci of 1.3093 before attention turns towards the 78.6% Fibonacci of 1.3209, both being frequently approached from June onwards. If bullish actions strengthen even further, the area between the previous top of 1.3297 and July’s high of 1.3361 should come in focus since any significant break higher would violate the long-term downward pattern that started from 1.4375. This would confirm the significance of the recent uptrend off 1.2660.

Alternatively, if the market extends losses, immediate support could be found around the 38.2% Fibonacci of 1.2926, while lower the 23.6% Fibonacci of 1.2823 and more importantly September’s low of 1.2784 could prove to be stronger obstacles as those are located below the Ichimoku cloud. This could be a warning that negative corrections may pick up speed in case the price manages to pierce these marks. Should these barriers fail to halt downside movements, bears could touch a wall around the 1.2660 bottom.

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Turning to the medium-term picture, the price continues to move sideways within the 1.3361-1.2660 range. Any move above the upper bound of 1.3361 would increase chances for a bullish outlook, while a bearish profile would come into play below 1.2660.

To sum up, the short-term bias looks neutral to positive, while in the medium-term the risk is neutral.