- GBP / USD came under intense selling pressure and broke through important support levels.
- The oversold conditions on the hourly charts helped ease the downward pressure near the 1.3225 area.
- The short-term technical setup may already have shifted in favor of bearish traders.
The pair GBP/USD It witnessed strong selling on the first day of a new trading week and retraced further from the highest level since April around the 1.3540 region touched on Friday. Fading hopes of a last-minute Brexit deal took their toll on the British pound, which, in turn, was seen as a key factor putting pressure on the major.
From a technical perspective, a sustained break below the 200 hourly SMA, around the 1.3380-75 region, was considered a key trigger for intraday bearish traders. A subsequent advance to the 23.6% Fibonacci level from the strong upward move of 1.2676-1.3540 compounded the downward pressure and dragged the GBP / USD pair to more than two week lows.
The steep intraday decline took some short-term trading stops near the strong horizontal support at 1.3300-1.3290, which could have set the stage for an extension of the sharp corrective decline. That said, the oversold conditions helped limit the downside, rather it helped the GBP / USD pair to find some support near the 1.3225 region.
The GBP / USD pair has now rallied to the 1.3300 area, although any further rally could be seen as a selling opportunity and is in danger of fading quickly near the 1.3330 region (23.6% Fibonacci level).
On the downside, the intraday swing lows, around the 1.3225 area, approaching 38.2% Fibonacci. level – now becomes immediate support to defend. Some subsequent selling should make GBP / USD vulnerable to further weakening below 1.3200, possibly to test the next major support near the 1.3110-05 area, or the 50% Fibonacci level.
1 hour chart
Technical levels
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