GBPUSD is in a downtrend in the short-term after falling from the June 30 high of 1.3029. The risk remains to the downside as the market is falling in a down sloping channel on the 4-hour chart.
The RSI indicator is below 50, which also asserts the bearish bias in the market. However, the indicator has flattened out, suggesting downside momentum has faded, leading to consolidation in the near-term or possibly a pullback in prices.
GBPUSD has found support in the 1.2860 area. This is the 38.2% Fibonacci retracement level of the upleg from 1.2588 to 1.3029. Should this level fail to hold and prices break below the channel, then the 50% Fibonacci at 1.2808 will be targeted. A deeper decline from here would strengthen the bearish bias.
Only a move above resistance at the 23.6% Fibonacci at 1.2925 would shift the outlook and could bring about a move towards resistance at 1.2983 (6 July high) with scope to re-test the June 30 peak at 1.3029. From there, there would be a resumption of the uptrend that started from the June 21 low of 1.2588.
The short-term bearish bias remains intact for now as the 20-period moving average (MA) crossed below the 50-period MA on July 7, giving a bearish signal.
