GBP/USD traded lower during the Asian session Monday. However, it hit support slightly above 1.4080, and then, it rebounded somewhat. Since May 17th, the pair has been mostly trading in a sideways range, between that level and the 1.4100 zone and thus, we will take a neutral stance. However, bearing in mind that it is still above the upside support line drawn from the low of April 12th, we would see more chances for the rate to exit the range to the upside, rather than to the downside.
The bulls could take control soon and go for another test near the 1.4220 barrier, which is the upper bound of the range. That said, we cannot rule out another setback from near that territory, before the next leg north and a potential break above that upper bound. If indeed, we do see the rate breaking that zone, and even better, clearing the peak of June 1st, at 1.4250, this would confirm a forthcoming higher high and may see scope for bullish extensions towards the 1.4315 hurdle, defined as a resistance by the high of April 18th, 2018.
Shifting attention to our short-term oscillators, we see that the RSI, although slightly below 50, has turned up again, while the MACD, even though negative, stands above its trigger line and points somewhat higher as well. Both indicators suggest that the rate may start gathering upside momentum soon, which supports the notion for some short-term advances for now, even at least within the aforementioned range.
Now, in order to start examining whether the bears have gained full control, we would like to see a decisive dip below 1.4005, a support marked by the low of May 13th. The rate would already be below the pre-mentioned upside line, and we may see declines towards the 1.3940 or 1.3912 territories. If the sellers are not willing to stop there, then a break lower may set the stage for extensions towards the low of May 4th, at 1.3840.
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