- GBP / USD remains under some selling pressure for the second day in a row on Monday.
- Repeated failures near the 1.3700 level constituted the bearish formation of multiple highs.
- A subsequent dip below an uptrend line could have set the stage for a further decline.
The GBP / USD pair has seen some selling for the second day in a row on Monday and is back further from the multi-year highs around the 1.3700-1.3710 region set last week. Repeated failures near the aforementioned resistance zone constituted the formation of a bearish pattern of multiple highs on the short-term charts.
Meanwhile, the retracement slide has spread during today’s European session, dragging the GBP / USD pair to multi-day lows, around the 1.3520 region. This marks a bearish break below the support of a nearly a month uptrend line and could have set the stage for a further downside move in the near term.
The bearish outlook is reinforced by the fact that technical indicators have been gaining negative traction on the 1 hour chart. That said, the oscillators on the daily chart, although they have been losing positive momentum, have yet to confirm the bearish bias and therefore warrant some caution for aggressive investors.
Therefore, it will be prudent to wait for a continuation of selling below the 38.2% Fibonacci retracement of the 1.3188-1.3710 positive move before opening new bearish positions. A subsequent dip below the key psychological level of 1.3500 will reaffirm the negative setup and will drag the GBP / USD pair towards the 50% Fibonacci retracement, around 1.3450.
On the other hand, any significant rally above the trendline support break point mentioned now could be seen as a selling opportunity. This, in turn, should limit the rise of the GBP / USD pair near the 23.6% Fibonacci, just below the 1.3600 level. However, a sustained strength above this region will negate the negative outlook.
GBP / USD 4 hour chart
GBP / USD technical levels
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