Hello traders! GBP/USD currency pair has been stuck between the support and resistance for over a month. The resistance has been established at 1.2647 level, while the support is at 1.2175, which is 38.2% Fibonacci retracement of the overall uptrend.
However, on the May 15, price broke below the support suggesting further price weakness. After the breakout price corrected up and currently facing strong resistance at 1.2318. This resistance is confirmed by 61.8% Fibonacci retracement applied to the last wave down. Along with the Fibs, the price has rejected 200 Exponential Moving Averages, with a very clean bounce so far.
As long as 4H close will remain below the 1.2318 and the 200 EMA, GBP/USD should be expected to move down. It is hard to say at this point whether it will be a strong price decline, but at the very least, pair should re-test previous support at 1.2175. As can be seen in the chart below, this support is confirmed by two Fibonacci retracement levels, making it a key short term target. Daily break and close below this price might confirm a stronger correction down, although it is yet to be seen.
On the upside, only Daily break and close above the 200 EMA will invalidate bearish outlook and can initiate and upside wave, towards 1.2647 resistance area.
Bias: Strongly bearish while below 1.2318
Potential Resistance Zone: 1.2325 – 1.2315
Have a profitable trading!