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by Darius Anucauskas

Is GBP/USD Going South For The Winter?

After attempting to push higher this morning, GBP/USD reversed 180 degrees and moved south, breaking one of its key support areas, at 1.2725. Now the big question is: will the pair remain below it? Given the fact that GBP/USD is getting weaker and it continues to trade below the short-term downside resistance line drawn from the peak of the 7th of November, the near-term outlook does not look promising for this pair. That said, GBP/USD is approaching another important area, the 1.2695 zone, which could provide some initial support, hence why we will remain cautiously-bearish for now.

A break below the 1.2695 hurdle could be that gateway towards lower levels as the move could confirm a forthcoming lower low and GBP/USD could continue pushing south, aiming for the 1.2660 level, as the next potential support. That level was last time tested on the 15th of August and marked the low of that day. If that support is not able to withstand the bear-pressure, the bears may drag the pair lower to the 1.2590 obstacle, marked by the low of the 21st of June last year.

Looking at our oscillators, the RSI and the MACD, both are somewhat in support of the above-discussed idea. The RSI is below 50 and keeps pointing lower. The MACD remains below zero and has slightly moved below its trigger line, which is a bearish indication.

Alternatively, in order to get comfortable with higher levels, we would need to see a push back above the aforementioned downside line. At the same time, the rate would place itself above the key resistance hurdle at 1.2825, marked by today’s high. We could then easily start targeting the 1.2865 obstacle, a break of which may clear the path towards the next potential area of resistance at 1.2925, which was the peak of the 22nd of November.

GBPUSD 4hour

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