GBPUSD has eased a bit after its downfall from the 1.4375 resistance barrier, finding support at the 10-month low of 1.2960 on July 19. Since the previous week the price is trading slightly higher, however, it remains below the mid-level of the Bollinger Band (20-SMA) and the 40-day simple moving average (SMA).
In the short-term, the neutral to bearish bias is likely to be continued as the RSI has flattened slightly below its threshold of 50 and the MACD has paused its downward move as it jumped above the trigger line. Still, downside risks have not been faded out yet as both indicators continue to fluctuate in bearish territory.
On the upside, the area between the 20- and 40-SMA around 1.3165 and 1.3210 respectively, could provide immediate resistance as it did in the past two weeks. Beyond this area, resistance could then run towards the 23.6% Fibonacci retracement level of the downleg from 1.4375 to 1.2960, near 1.3290. Yet, the cable needs to successfully break this level to endorse bullish sentiment again. Above this area, it could challenge the 1.3475 key level, taken from the high on June 7.
Alternatively, should the price continue south again, it would be interesting to see whether the lower Bollinger band can stop providing support, around 1.3015. The immediate support is coming from the 10-month low (1.2960) and if the market could drop below this low, the 1.2770 level could be another target given that this zone has been frequently tested during 2017.
Regarding the bigger picture, the sharp sell-off, especially in the past four months, has shifted the long-term outlook from positive to negative.
