Technical Analysis – GBPUSD stays on the sidelines as negative risks still linger
GBPUSD continued its short consolidation phase marginally below the 20-day simple moving average (SMA), as it was unable to close decisively above the 1.3600 level over the past week.
The 23.6% Fibonacci retracement of the 1.4248 – 1.3411 downtrend is currently keeping the bulls under control around 1.3608 as the technical picture is providing little hope for a change in the downbeat market sentiment. Despite the quick rebound off the 30 oversold level, the RSI remains stuck below its 50 neutral mark, while the Stochastics have clearly shifted southwards. Likewise, the negative intersections between the shorter- and longer-term SMAs keep promoting the bearish trend from the top of 1.4248.
Traders may remain on the sidelines unless the price motivates fresh selling below 1.3540, shifting all the attention towards the new 2020 low of 1.3411. Moving lower, the decline could next take a breather around the 1.3280 barrier, which has been acting both as support and resistance at the end of 2020. If this fails to hold too, it would be interesting to see if the 1.3163 area, which encapsulates the 38.2% Fibonacci of the 2020-2021 upleg can come to the rescue.
Otherwise, a sustainable move above the 20-day SMA at 1.3626 may see a test near the 50-day SMA and the 38.2% Fibonacci of 1.3730. However, a more challenging obstacle is placed between the tentative descending trendline and the 200-day SMA at 1.3840. Note that the 50% Fibonacci is also located within these boundaries. Hence, any step higher from here may switch the focus towards the 61.8% Fibonacci of 1.3982, unless the 1.3912 bar stands tall once again.
Summarizing, the short-term risk is still tilted to the downside for GBPUSD, but traders may wait for a close below 1.3540 before they engage in more selling.
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
