GBP/USD traded lower on Friday, breaking slightly below the 1.2400 zone, which provided support yesterday. Overall, the pair is printing lower highs and lower lows within a downside channel since June 10th, and thus, we would consider the near-term outlook to be negative for now.
If the bears are willing to stay in the driver’s seat, we may see them soon aiming for Monday’s low at 1.2335. If they don’t stop there, the next support to consider may be the 1.2290 territory, marked by the low of May 29th. The bears may decide to take a break after hitting that barrier, thereby allowing a corrective bounce. However, as long as Cable would be trading within the downside channel, we would see decent chances for another leg south. If this time the 1.2290 surrenders and breaks, the road towards the 1.2205 area may be opened. That zone provided support on May 27th.
Shifting attention to our short-term momentum studies, we see that the RSI stands below 50 and points down, while the MACD lies below both its zero and trigger lines. Both indicators detect downside speed and corroborate our view for some further short-term declines in this exchange rate.
In order to start examining whether the bulls have gained the upper hand, we would like to see a decisive rebound above 1.2465. This would take the rate above the upper boundary of the downside channel and may initially allow advances towards Wednesday’s high of 1.2545. Another break, above 1.2545, could extend the recovery towards the 1.2590 zone, defined as a resistance by the high of June 17th.
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