- GBP / USD bounces rapidly from the confluence support at 1.2860-55.
- Mixed technical indicators warrant some caution for bull traders.
The pair GBP/USD managed to bounce around 45 pips from the daily lows and updated the session highs, around the 1.2940 region in the last hour.
The intraday decline stalled near the confluence support at 1.2855, which comprises the lower bound of a short-term descending channel and the 23.6% Fibonacci level of the 1.3482-1.2676 dip. The bulls could now be looking to take advantage of the momentum beyond the 200-period SMA on the 4-hour chart, which is followed by the 38.2% Fibonacci level near the 1.2985 zone.
The latter coincides with the resistance of the trend channel, which if decisively cleared will negate any short-term bearish bias. Subsequent strength beyond the key psychological 1.3000 mark will negate any short-term bearish bias and trigger a short hedging move. The pair could then accelerate the positive move towards 50% of the Fibonacci level, around the 1.3070-75 region.
Meanwhile, the technical indicators on the 4-hour / day charts maintained their bearish bias and have yet to gain any significant traction on the 1-hour chart. The setup warrants some caution for the bulls and positioning for any significant positive movement for the GBP / USD pair amid growing economic fallout from renewed lockdown measures to curb COVID-19 risk cases.
On the other hand, the 1.2900 level now appears to protect the immediate drop. If it does not defend the mentioned support, the GBP / USD pair could become vulnerable to fall again and test the confluence support of 1.2860-55. Some subsequent selling should pave the way for a drop towards 1.2800 en route to the very important 200-day SMA, around the 1.2715-10 area.
4 hour chart
Credits: Forex Street
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