Technical Analysis – GBPUSD returns back inside the recent rectangle after failed breakout
May 19, 2023 12:28 pm
GBPUSD is once again back inside the rectangle that has been dominating price action since November 15, 2022. This is the third failed upside breakout in the past 45 days, thus raising questions about the bulls’ determination. GBPUSD is currently testing the support set by both the upper boundary of the rectangle and the 50-day simple moving average (SMA).
The bears are probably feeling a bit more confident, but the momentum indicators are not extremely encouraging for them. The Average Directional Movement Index (ADX) confirms the trendless nature of GBPUSD, and the RSI is just a tad below its 50-threshold. At least, the stochastic oscillator is more interesting, as it is currently edging lower with a good gap from its moving average.
Should the bears decide to stage a more serious pullback, they would first have to clear the 50-day SMA at 1.2408. They would then come up against stronger support at the 1.2280-1.2287 area, set by the 50% Fibonacci retracement of the June 1, 2021 – September 26, 2022 downtrend and the 100-day SMA. The path then appears to be clear until the 200-day SMA at 1.1964.
On the other hand, the bulls must feel under the weather after the failed breakouts. Should they muster the necessary courage, they would have to retest the April 14, 2023 high of 1.2546 and then aim for the 61.8% Fibonacci retracement at 1.2750. If successful, they could then try their luck at the 1.3160 level defined by the December 8, 2022 low.
To conclude, the repeated failed upside breakouts appear to have dented the bulls’ confidence. If the bears manage to break 1.2408, they could lead the market much lower.
GBPUSD is once again back inside the rectangle that has been dominating price action since November 15, 2022. This is the third failed upside breakout in the past 45 days, thus raising questions about the bulls’ determination. GBPUSD is currently testing the support set by both the upper boundary of the rectangle and the 50-day simple moving average (SMA).
The bears are probably feeling a bit more confident, but the momentum indicators are not extremely encouraging for them. The Average Directional Movement Index (ADX) confirms the trendless nature of GBPUSD, and the RSI is just a tad below its 50-threshold. At least, the stochastic oscillator is more interesting, as it is currently edging lower with a good gap from its moving average.
Should the bears decide to stage a more serious pullback, they would first have to clear the 50-day SMA at 1.2408. They would then come up against stronger support at the 1.2280-1.2287 area, set by the 50% Fibonacci retracement of the June 1, 2021 – September 26, 2022 downtrend and the 100-day SMA. The path then appears to be clear until the 200-day SMA at 1.1964.
On the other hand, the bulls must feel under the weather after the failed breakouts. Should they muster the necessary courage, they would have to retest the April 14, 2023 high of 1.2546 and then aim for the 61.8% Fibonacci retracement at 1.2750. If successful, they could then try their luck at the 1.3160 level defined by the December 8, 2022 low.
To conclude, the repeated failed upside breakouts appear to have dented the bulls’ confidence. If the bears manage to break 1.2408, they could lead the market much lower.
Related Posts: