GBPUSD has been on the retreat for one month now, trading below a short-term downtrend line and its 50-day moving average (MA). But in the bigger picture, the pair is still in an uptrend that started back in September.
This misalignment puts extra emphasis on the 1.2610 region. If sellers pierce below this area, it would mark a lower low on the daily chart, sending a strong signal that the longer-term uptrend has started to break down.
Momentum oscillators like the RSI and the MACD are flashing bearish signals, but not excessively so. They are simply reflecting the latest slide in the market, providing little insight about what comes next.
If sellers remain in control and manage to slice below 1.2610, the pair could then seek support near the 1.2400 territory, which has acted both as support and resistance this year. If that’s violated too, a bigger battle might ensue near the May low at 1.2310.
Now if buyers come back into action, their first test will be getting through the busy 1.2820 area, which roughly encompasses the 50-day MA and the short-term downtrend line too. A break higher would suggest that the recent pullback was merely a correction within a broader uptrend, unlocking the door towards the 1.3000 hurdle.
In short, GBPUSD seems bearish in the short-term but bullish in longer-term timeframes. A break either below 1.2610 or above 1.2820 would reveal which side has the upper hand.
. But in the bigger picture, the pair is still in an uptrend that started back in September. ){kind=link}