Technical Analysis – GBPUSD’s bullish tone withstands powerless pullback

Anthony Charalambous, XM Investment Research Desk

GBPUSD’s recent retreat is nearing the 50-period simple moving average (SMA) at 1.3647 and so far appears to be incapable of hurting the bullish tone in the pair. The upwards creeping red Tenkan-sen line and the steadily climbing SMAs are promoting further advances in price.

However, the flattening blue Kijun-sen line and the short-term oscillators are endorsing the retraction in the pair. The MACD, some distance above zero, has plunged under its red trigger line, while the decreasing RSI has pierced below the 50 threshold. The negative charge in the stochastic oscillator and the dip of its %K line below the 20 level, are backing additional losses in price.

To the downside, sellers may face initial key support from the 50-period SMA at 1.3647 until the 100-period SMA at 1.3612, a region which surrounds the blue Kijun-sen line and the 1.3622 low. Retracing further, the bears may hit the cloud’s floor at 1.3578, which if violated, could see the pair dive towards the critical support belt of 1.3500-1.3519 that happens to be reinforced by the 200-period SMA. Sinking from here, traders’ focus may shift to another limiting base of 1.3428-1.3450.

If buyers re-emerge and push higher, first resistance may be found at the red Tenkan-sen line residing around the 1.3700 barrier, ahead of the multi-year top of 1.3745. Resuming the climb, the pair’s aim could rise towards the 1.3772-1.3800 resistance section. Should more aggressive gains transpire the pair may propel towards the 1.3894 border, from back in April 2018.

Summarizing, GBPUSD’s short-term bullish bias seems to be shielded from sustaining any significant damage, after the recoil in price from the 1.3745 top.