GBPUSD has steadied around 1.2550 and is attempting a rebound after plunging to a 22-month low of 1.2410 on Thursday. The RSI has reversed higher but has yet to exit the oversold zone, while the MACD histogram remains deep in negative territory below its red signal line, underlining the ongoing bearish risks in the near term.
If today’s bounce back gathers additional steam, the bulls could next target the 200% Fibonacci extension of the March upleg at 1.2701. The 161.8% Fibonacci extension of 1.2815 is another potential resistance area. But for a more sustained positive momentum, the price would need to recover above the 20-day moving average, which is currently just below the 123.6% Fibonacci of 1.2929.
However, a resumption of the selloff is more than likely at this point, and should the pair drop below yesterday’s 22-month trough, attention would turn to the 1.22 region, which contains the 361.8% Fibonacci of 1.2218.
To sum up, a climb above the 20-day MA would eliminate the negative pressures, switching the short-term bias to neutral, whereas a fresh tumble towards 1.22 would reinforce the bearish longer-term outlook.
