GBPUSD keeps trading indecisively at the bottom of the six-month-old bearish channel and close to its new 2021 low of 1.3160 for almost a week now.
The risk for an upside correction is elevated given the RSI’s prolonged presence around its 30 oversold level and the positive trajectory in the Stochastics, while the gradual recovery in the MACD is another encouraging signal that buying interest is growing.
The fact that the 38.2% Fibonacci retracement of the long-term uptrend from 1.1409 to 1.4248 is adding a floor under the price makes the area around 1.3160 an ideal place for a rebound. That said, for the bullish argument to gain credence, the market will probably need to initially close above the restrictive red Tenkan-sen line at 1.3246 and then surge beyond the 1.3355 – 1.3428 zone, where the 20-day simple moving average (SMA) is placed. If that is the case, the rally could see a sharp extension towards the 50-day SMA and the 1.3483 barrier.
In the event the bearish trend extends below the channel, traders may look for support near the 1.3100 and 1.3000 psychological levels before a more aggressive decline takes place towards the 50% Fibonacci of 1.2828.
In summary, although GBPUSD is maintaining a negative bias, the ongoing sideways move around the channel’s lower boundary increases the odds for an upside reversal, with traders waiting for a sustainable break above 1.3300 to raise exposure in the market.
