On the daily chart below for GBPUSD, we can see that the market has been struggling to keep the upside momentum and the price action has become slow and choppy. The trading above the 1.2444 high is tentative as the market keeps flipping from on side to the other as the economic data can’t give a clear picture.

On Monday, the US ISM Manufacturing PMI beat expectations with inflation and employment sub-indexes back into expansion and the USD appreciated. Yesterday, the US Job Openings missed expectations and the market focused again on the weakening labour market and rate cuts and the USD depreciated. For now, the red long period moving average is offering support for the buyers, but a break below it would bring the sellers aggressively in.

GBPUSD technical analysis

On the 4 hour chart below, we can see more closely the recent price action and the tentative trading around the 1.2444 high. The highest price reached is 1.2583 after an unsurprising PCE data, but then the sellers pushed the price down again.

The whole rally since the 1.20 handle has been diverging with the MACD, which is generally a sign of weakening momentum and it’s often followed by pullbacks or reversals. In fact, we got many pullbacks along the way, but if the price makes a new lower low below the 1.2444 or better yet the 1.2344 level, we should get the reversal and the sellers should have a clean way back to the 1.20 handle.

On the 1 hour chart below, we can see that there’s a pretty strong resistance level at the 1.2510 zone where we can also find the 50% Fibonacci retracement level of the entire fall from the 1.2583 high. This should be the barometer for risk sentiment. If the price rallies above it, the buyers should have the upper hand and probably extend the rally towards the 1.2583 high.

The sellers, on the other hand, may lean on that resistance to position for a fall towards the 1.2444 support and beyond. Today we have the US ISM Services PMI and the FOMC Policy Announcement, so watch out.