GBPUSD decreased considerably in the previous week following the bounce off the 23.6% Fibonacci retracement level of the downleg from 1.4375 to 1.3200, near the 1.3475 resistance barrier. The cable is trying to pare some of its losses but remains weak as it is still developing below the mid-level of the Bollinger Band (20-day simple moving average) in the near term.
In the daily timeframe, the RSI indicator is moving in the negative territory and is flattening near the threshold of 50. Moreover, the MACD oscillator posted a bearish crossover with its trigger line below the zero line, extending the scenario for further bearish movement.
Should prices continue to head lower and break the significant six-month low of the 1.3200 psychological level, immediate support could come at the 1.3040 support hurdle. A drop below this region as well would take the pair closer to the next support at the 1.2770 level, which holds almost 500 pips away from the current market price. Investors need to be cautious for any upside retracement until the latter level.
To the upside, there is an immediate resistance of the mid-level of the Bollinger Band around 1.3325 while above that, the next major resistance to watch is the 23.6% Fibonacci of 1.3475. However, the price needs to surpass the upper boundary of the Bollinger band and the 40-day SMA before challenging the aforementioned psychological hurdle. A successful close above this barrier, could open the way towards the 1.3600 psychological level, taken from the highs at the beginning of May.
Having a look at the bigger picture, GBPUSD started an aggressive downward trending rollercoaster after it touched the 1.4375 resistance level last April and failed to complete a strong retracement movement.
