GBPUSD attempted to recoup last week’s losses on Monday but the tough eight-month old resistance line managed to block the way once again and keep the price within the 1.3300 territory as Brexit negotiations continue.
The momentum indicators are providing a mixture of signals as the RSI is trying to recover above its 50 neutral mark, the MACD is gradually losing strength below its red signal line, and the red Tenkan-sen line seems to be flattening around the blue Kijun-sen. That said, the market trend in the three-month picture continues to point upwards, and the price’s refusal to weaken below its previous high of 1.3175 on Monday provides further encouragement that the positive pattern may hold for longer.
To enhance its uptrend, however, the pair should successfully overcome the resistance line and close comfortably above the key 1.3480 – 1.3537 area. The 1.3600 level, which has been a strong barrier to upside movements during the 2017 – 2018 period, and the 1.3755 hurdle could next halt the rally.
Should the bears drive below the 78.6% Fibonacci retracement of the 1.3481 – 1.2674 downfall, which is currently adding some footing around the 1.3315 mark and the 20-day simple moving average (SMA), the focus will shift back to the 1.3175 region. This is where the 61.8% Fibonacci, the 50-day SMA and the previous high are located, hence any violation may attract attention. Still, sellers may remain patient and wait for a second negative warning below the supportive trendline seen around the 50% Fibonacci of 1.3080. In this case it would be interesting to see if the next Fibonacci levels can catch the fall.
Meanwhile in the medium-term window, the pound has resumed its neutral profile below the 1.3500 level and above the 1.2674 bottom following the pullback from the 2 ½-year high of 1.3537.
In brief, GBPUSD is looking indecisive below a strong resistance line despite maintaining a positive structure in the short-term picture. A significant close above that line or below the supportive ascending trendline could determine the next direction in the price.
