GBP/USD traded higher yesterday, after hitting once again the key support of 1.3670. That said the recovery stayed limited near the 1.3775 zone. Even if we see another round of buying, the rate continues to trade below the tentative downside resistance line drawn from the high of February 24th, and thus, we would consider the near-term outlook to be cautiously negative.
As we already noted, another round of buying is possible, which could take the rate near the aforementioned downside line. The bears may regain control from near that zone and perhaps push the battle lower for another test near 1.3670. If that barrier is not able to stop the slide this time around, its break would confirm a forthcoming lower low and may see scope for declines towards the 1.3563 territory, defined as a support by the low of February 4th.
Shifting attention to our short-term oscillators, we see that the RSI is flat near its 50 line, while the MACD, although negative, lies above its trigger line. The RSI reveals no directional momentum, but the fact that the MACD runs above its trigger line keeps the door open for some more recovery before the bears decide to take charge again.
Now, in order to start examining the bullish case, we would like to see a break above the 1.3920 obstacle, marked by the high of April 6th. This will confirm a forthcoming higher high and may initially pave the way towards the psychological zone of 1.4000, which prevented the rate from drifting further north between March 1st and 18th. If the bulls are strong enough to overcome that hurdle this time around, we may experience extensions towards the 1.4080 barrier, marked as a resistance by the inside swing low of February 24th.
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