GBP/USD traded lower on Tuesday after it hit resistance near 1.3275 during the Asian session and managed to break below 1.3215 during the early European morning. Cable continues to trade below the prior long-term uptrend line taken from the low of the 14th of March 2017, and also below a short-term downside resistance line drawn from the peak of the 2nd of May. What’s more, today’s dip below 1.3215 has confirmed a forthcoming lower low on both the 4-hour and daily charts, which combined with the aforementioned technical signs lead us to the conclusion that the outlook is negative.
If the bears are strong enough to stay in the driver’s seat, we would expect them to push the price towards the 1.3060 zone, marked by the low of the 13th of November. Another dip below that territory is possible to pave the way for the psychological round figure of 1.3000.
Turning attention to our short-term oscillators, we see that the RSI edged south and just touched its toe below its 30 line, while the MACD lies below both its zero and trigger lines, pointing down as well. These indicators detect strong downside speed and support the case for Cable to continue drifting lower, at least in the near term.
On the upside, a break above 1.3300 is possible to see scope for upside extensions towards the aforementioned short-term downside line or the 1.3440 resistance hurdle. However, even if this is the case, we would still see a decent chance for the sellers to jump in from near those levels. We would like to see a clear and decisive move above 1.3470 before we start examining whether the near-term outlook has turned to somewhat positive. Such a move is likely to initially set the stage for the 1.3565 obstacle, defined by the peak of the 17th of May.
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