- GBP / SUD stopped its recent strong bullish move near the 61.8% Fibonacci level / resistance level.
- The risk aversion boost benefited the dollar as a safe haven and limited any further gains.
- A sustained break below 1.3900 is needed to negate the positive outlook.
The pair GBP/USD It fell around 40 pips from the daily highs and has now fallen to the lower end of its intraday trading range, around the 1.3940 region.
The momentum of risk aversion in the markets boosted some safe-haven flows to the US dollar. This, in turn, was seen as a key factor that did not help GBP / USD capitalize on its positive intraday move towards the 1.3980-85 region, or month-long highs.
From a technical perspective, the recent strong bounce from the lowest level since February stalled near the 61.8% Fibonacci level of the 1.4249-1.3572 drop. That said, the formation of an uptrend channel on hourly charts favors bullish traders.
The positive outlook is reinforced by the fact that the technical indicators on the daily chart have been gaining positive traction and are still far from being in the overbought zone. Therefore, any subsequent decline could be capped near the trend channel support.
However, a sustained break below could spark some technical selling and accelerate the corrective pullback towards the 1.3900 mark. The latter coincides with the 50% Fibonacci level, which if decisively broken will set the stage for further weakness.
The GBP / USD pair could extend the decline towards the horizontal support at 1.3860 en route to the Fibonacci level of 38.2%, around the 1.3830-25 region. Some subsequent selling below 1.3800 will change the short-term bias in favor of bearish traders.
On the other hand, the 1.3980-85 region (61.8% Fibonacci level) could continue to act as an immediate hurdle. This is closely followed by the psychological level of 1.4000 before the upper end of the resistance of the aforementioned trend channel, around the 1.4015 region.
A convincing advance will be seen as a new trigger for bull traders and will push the GBP / USD pair further towards the intermediate resistance of 1.4070-75. Momentum could extend further and allow the bulls to target a rebound to the 1.4100 level.
1 hour chart
Technical levels
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