Technical Analysis – GBPUSD turns bullish in short term after dramatic slump

GBPUSD has reversed back up after finding strong support at the 28-month low of 1.1760. The pair is advancing above the 20-day simple moving average (SMA) and the next obstacle to surpass is the medium-term descending trend line.

The momentum indicators are pointing to a positive bias in the short term with the RSI just above 50 and the MACD is holding above its trigger line in the negative region.

A move to the upside could see immediate resistance at the 40-day SMA at 1.2150 but should the market increase positive momentum above this area, the 23.6% Fibonacci retracement level of the down leg from 1.3640 to 1.1760 at 1.2200 could be the next level in focus. A stronger area, though, could be found at the 1.2340-1.2455 since any violation of this point could increase chances for further gains probably towards the 38.2% Fibonacci of 1.2470.

In the wake of negative pressures, the market could meet immediate support at the 20-day SMA at 1.1990 before it heads lower to the 1.1890 support. A successful close below this level could see a retest of the previous low of 1.1760, while in case of steeper declines, the pair could breach this trough, diving to the 1.1410 barrier, registered in March 2020.

In the medium-term, the outlook remains negative since prices hold below the falling trend line; however, in the short-term timeframe, the market is positive.

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