The GBP/USD currency pair has recently seen a rapid downfall, raising questions over its four-month-old positive trend. Despite the recent downturn, the bullish pattern remains intact as the bears have not been able to chart a new lower low below January’s trough of 1.1840. The flattening 200-day simple moving average (SMA) and the 23.6% Fibonacci retracement of the 1.0324-1.2445 upleg are currently providing support at 1.1945. However, with falling technical indicators, the pair is facing potential losses in the near future.
The Battle Below 1.1945
The GBP/USD pair is facing strong resistance from the 1.1945 floor, with a potential tumble towards the 1.1740 constraining zone if the bears are successful in breaking through this level. This could confirm a bearish double top pattern and prompt a further aggressive downfall, potentially stalling near the 50% Fibonacci mark of 1.1385.
On the other hand, if the pair is able to hold above 1.1945, the focus will shift to the long-term descending trendline at 1.2030. A close above this level could trigger a bounce back into the 1.2175-1.2280 zone and potentially prompt a rally towards May’s barrier of 1.2600-1.2665.
Despite the recent rapid decline, the bullish pattern has held as the bears have not been able to chart a new lower low. Additionally, the stochastic oscillator has dipped well into oversold territory and could provide support for the GBP/USD pair in the near future, potentially leading to a move above key resistance at 1.2030.
Key Levels to Watch
In conclusion, the GBP/USD pair is currently at a critical juncture, with sellers holding the upper hand and waiting for a clear extension below 1.1945 to gain fresh impetus. On the other hand, a move above 1.2030 is expected to motivate some buying and potentially trigger a bounce back into the 1.2175-1.2280 zone. Investors and traders alike should closely monitor these key levels for any potential changes in market sentiment and make their trading decisions accordingly.