Technical Analysis – GBPUSD awaits next directional move
July 18, 2023 3:27 pm
GBPUSD has a difficulty in reviving last week’s bullish explosion, which lifted the pair to a 15-month high of 1.3141.
In the four-hour chart, the price seems to be moving sideways within a bullish pennant formation, which theoretically is a sign of a positive trend continuation after an almost vertical increase. Yet, with the 20-period simple moving average (SMA) blocking the way higher at 1.3094 and the RSI extending its downward trajectory towards its 50 neutral mark, a bearish triangle breakout would not be very surprising. Likewise, the MACD keeps pointing south below its red signal line, while the stochastic oscillator is reversing its latest rebound.
A slide below the triangle’s lower boundary at 1.3070 could last till the 1.3000 psychological mark and perhaps stretch a bit lower to test the April ascending line at 1.2985. The 50-period SMA is approaching that region too. Hence, another step lower could motivate fresh selling towards the 2021 broken resistance trendline at 1.2922. Failure to rebound from there may open the door for the 1.2845 former resistance zone.
Alternatively, if the market confirms a bullish pennant formation above 1.3120, it could initially pause near the 1.3141 top before speeding up to 1.3180-1.3200. The 1.3300 handle could be the next destination.
In a nutshell, the short-term risk for GBPUSD is leaning more to the downside than to the upside. Still, if the pair sets a strong foothold around 1.3070 and within the triangle, hopes for an uptrend resumption will resurface.
GBPUSD has a difficulty in reviving last week’s bullish explosion, which lifted the pair to a 15-month high of 1.3141.
In the four-hour chart, the price seems to be moving sideways within a bullish pennant formation, which theoretically is a sign of a positive trend continuation after an almost vertical increase. Yet, with the 20-period simple moving average (SMA) blocking the way higher at 1.3094 and the RSI extending its downward trajectory towards its 50 neutral mark, a bearish triangle breakout would not be very surprising. Likewise, the MACD keeps pointing south below its red signal line, while the stochastic oscillator is reversing its latest rebound.
A slide below the triangle’s lower boundary at 1.3070 could last till the 1.3000 psychological mark and perhaps stretch a bit lower to test the April ascending line at 1.2985. The 50-period SMA is approaching that region too. Hence, another step lower could motivate fresh selling towards the 2021 broken resistance trendline at 1.2922. Failure to rebound from there may open the door for the 1.2845 former resistance zone.
Alternatively, if the market confirms a bullish pennant formation above 1.3120, it could initially pause near the 1.3141 top before speeding up to 1.3180-1.3200. The 1.3300 handle could be the next destination.
In a nutshell, the short-term risk for GBPUSD is leaning more to the downside than to the upside. Still, if the pair sets a strong foothold around 1.3070 and within the triangle, hopes for an uptrend resumption will resurface.
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