Technical Analysis – GBPUSD extends recovery, but still in downtrend
GBPUSD climbed higher on Thursday but met resistance today at 1.1228, still below the short-term downtrend line drawn from the high of August 10 as well as below the longer-term downside line taken from the high of March 23. This keeps the prevailing downtrend intact but given that the pair has been forming higher lows on the 4-hour chart this week, a break below 1.0765 may be needed to signal that the bears are back in full control.
The RSI lies near its 70 line but it has shifted down lately, while the MACD remains above both its zero and trigger lines, still pointing up. The mixed indications provided by the oscillators enhance the view that traders may need to wait for clearer signals before they become confident on a downtrend continuation.
A dip below 1.0765 could confirm the break below the line connecting the higher lows formed this week and may encourage the bears to dive towards Wednesday’s low of 1.0540. If they don’t exit the action from around there, a break lower could carry the losses towards Monday’s low of 1.0325.
On the upside, a break above 1.1465 could confirm the break above the 200-period exponential moving average (EMA) as well as the breach of the downtrend line drawn from the high of August 10. That said, this may only signal a larger upside correction, perhaps towards the high of September 13 at 1.1735 or the longer-term downside line taken from back in March. A trend reversal might be put on the table upon a decisive break above the 1.1900 area, marked by the high of August 26.In brief, GBPUSD extended its latest recovery but remained below two important downside lines, something that keeps the prevailing downtrend intact. Nonetheless, the fact that the pair has been printing higher lows this week, likely paints a neutral picture in the short run.
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.