The GBP/USD currency pair is currently navigating a short-term bearish downtrend, characterized by a recent test of the support levels situated at 1.2750. This key support area has been under scrutiny, providing an interesting focal point for traders and investors.A significant aspect of the current market sentiment is the positioning of the 200-day and 50-day moving averages. Both moving averages have positioned themselves below the current price, reinforcing the bearish undertone in the market. This alignment underscores the prevailing bearish sentiment that has been evident in recent price action.
Scenario 1: Potential Upside Movement
In the first scenario, there exists the possibility of a bullish correction. Should the price manage to gather momentum, we could see a push towards the range of 1.2775 to 1.2803, followed by potential further gains into the range of 1.2756 to 1.2779. This movement could signal an evolving bullish sentiment. Should this trajectory hold, the next resistance levels to monitor are situated at 1.2827 and 1.2847, with particular attention on the upper boundary at 1.2866.
Scenario 2: Downside Risk and Support Levels
Conversely, the second scenario outlines the potential for a downward shift in price. Should the current support at 1.2693 be tested and confirmed, it could act as a pivotal level to halt further downward momentum. A breach of this level might lead to a subsequent test of the 1.2672 mark, emphasizing its significance. In the event that 1.2672 fails to provide adequate support, a descent towards the 1.2654 and 1.2622 levels becomes plausible. Notably, 1.2654 holds substantial importance as a robust support level, possibly influencing price action.
Examining the short-term momentum of the pair reveals an interesting dynamic. While the overall trajectory leans toward a bearish bias, recent upswings have been observed, indicating a short-term momentum leaning toward the upside, albeit within a broader bearish context. The Relative Strength Index (RSI) serves to emphasize this, having ventured into oversold territory, a potential indication of a price reversal or consolidation.