On the daily chart below for GBPUSD , we can see that the market is struggling to keep the upside momentum every time it breaks above the top of the range. The last breakout failed as US Retail Sales missed expectations across the board and sent the market lower on fears of an earlier than expected recession.
The buyers though leant on the red long period moving average and started charging higher as US PMIs came out much better than expected and pushed the recessionary fears further away. If the buyers fail again here, then we may see another selloff with the moving averages crossing downwards and this time the sellers may take full control.
GBPUSD technical analysis
On the 4 hour chart below, we can see that recently the price broke out of the rising channel. The price has been diverging with the MACD for the whole upside move from the 1.20 handle. When there’s a divergence, the price generally pulls back or reverses completely.
Here, the price has been keeping with the uptrend with large pullbacks along the way, but the breakout of the channel is a bad omen. The last line of defence for the buyers will be the support level at 1.2344. If that level breaks, then the sellers can really push the price all the way down to the 1.20 handle.
On the 1 hour chart below, we can see that the price has now pulled back to the trendline where we have the confluence with the 38.2% Fibonacci retracement level and the red long period moving average. This is a strong support zone and the buyers are likely to lean on it to resume the uptrend. In case the price breaks below the trendline, the sellers are likely to regain control and push the price first to the 1.2444 support and, on a further breakout, to the 1.2344 level.
