GBPUSD could not close successfully above the 1.1988 – 1.2000 bar (2016 – 2019 base) last week, with the price erasing its latest bullish attempt to chart a new two-year low at 1.1844 early on Tuesday.
The market is lacking conviction for a meaningful bounce back as the RSI keeps hovering comfortably below its 50 neutral mark, while the MACD is displaying stronger bearish dynamics, extending its negative trajectory below its red signal line.
Hence, the base scenario is for the one-year-old downtrend to see further continuation, likely testing the tentative support line somewhere between 1.1700 and 1.1640, with the latter representing the 161.8% Fibonacci extension of the latest upside correction. If the bears snap that floor, the next destination will be the pandemic 2020 bottom of 1.1408.
In the event of an upside reversal, the pair may re-challenge the 1.1988 – 1.2000 ceiling before meeting the 20-day simple moving average (SMA) at 1.2132. Another advance from here could last until the 1.2300 zone, where the 50-day SMA and the resistance trendline from February reside. Should the bulls reclaim the previous high of 1.2400 as well, the recovery may pick up steam towards May’s high of 1.2665.
Summarizing, downside forces are expected to dominate in the coming sessions, with traders likely looking for support within the 1.1700 – 1.1640 region.
