- GBP / USD remains under some selling pressure for the second day in a row on Friday.
- The intraday downtrend manages to find some support near the 1.3900 confluence level.
- Mixed technical indicators warrant some caution before opening aggressive directional positions.
The GBP / USD pair has seen strong selling for the second day in a row on Friday and has fallen to lows of more than a week at the start of the European session.
The sharp corrective decline from the nearly three-year highs has stopped near the confluence support at 1.3900, amid an oversold RSI on intraday charts. The mentioned level comprises the 50% Fibonacci retracement of the strong positive move after the BoE and the 100-period SMA on the 4-hour chart. This should now act as a key point for intraday traders.
Meanwhile, the oscillators on the daily chart have turned down from the overbought zone and are still in bullish territory. This, coupled with the appearance of some lower level buying, warrants some caution for bears. That said, the inability of the GBP / USD pair to capitalize on the move above the 1.3950 region supports the prospects for further losses.
The mixed media setup makes it prudent to wait for a sustained break below the 1.3900 level before investors start positioning for any further declines. A convincing break below this region would make the GBP / USD vulnerable to accelerate the decline towards 1.3850 en route to the 61.8% Fibonacci retracement near the 1.3820-15 region.
On the other hand, the 1.3950 level now appears to act as immediate resistance. Any further rally could be seen as a short opportunity near the 1.3975-80 region (38.2% Fibonacci). This, in turn, should limit the GBP / USD pair near the key psychological level of 1.4000, where it is the break point of the support of the three-week uptrend line.
GBP / USD 4 hour chart
GBP / USD technical levels