GBPUSD Flirts With 6-Month Low, Holds In Descending Channel

Technical analysis of Forex market

GBPUSD plunged to a six-month low of 1.2480 on Friday, continuing the strong sell-off from March 13.

The pair is currently hovering near the return line of the descending channel and the short-term moving averages are following the downfall of the price action. The RSI is standing near the 30 level but is flattening, suggesting that there is a possibility of a weaker bearish move in the daily chart. However, the MACD oscillator is strengthening its negative movement below the zero and trigger lines.

A successful drop below the latest leg around 1.2500, could lead to cable flirting with a new lower low near the 1.2400 handle and the lower boundary of the channel. Slightly below this level, the 21-month low of 1.2390 and the 1.2360 support levels would come into focus.

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In the positive scenario, if there is an upside correction the pair could meet the 20- and 40-simple moving averages (SMAs) currently at 1.2620 and 1.2655 respectively. More bullish pressure could push the market until the 23.6% Fibonacci retracement region of the downleg from 1.3380 to 1.2480 near 1.2690.

Summarizing, GBPUSD has been developing in a bearish movement over the last three months and investors are still looking for selling opportunities as the price failed to post a significant upside rally.

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