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GBPUSD trims more gains after bearish channel breakout
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Technical signals remain negative; support at 1.2670
GBPUSD bears powered up on Tuesday with scope to fight the 200-day simple moving average (SMA) and the support trendline from the 2022 low at 1.2670, which triggered the April-July bull trend. Notably, the 50% Fibonacci retracement of this upleg is in the neighborhood.
The ongoing negative correction emerged after the price failed to crawl back above the broken bullish channel and the 1.2814 level, raising concerns about a bearish continuation.
The question now is whether the 1.2670 support region will put brakes on the bearish development. Technically, it’s likely the bears will break through this level as the price has retreated beneath its 20- and 50-day SMAs. Moreover, the RSI and the MACD are decelerating within the bearish area, backing the downward move in the price.
If the floor at 1.2670 collapses, the next turning point could be found near the 61.8% Fibonacci mark of 1.2583 or around the 1.2512 barrier. A continuation lower could see another important test near the strong ascending trendline near 1.2443, a break of which is expected to prompt a faster decline towards April’s trough of 1.2298.
Should the pair secure a strong footing near 1.2670 there is potential for an advance back towards the lower band of the broken bullish channel seen at 1.2814. Slightly higher, the 20-day SMA and the 23.6% Fibonacci number of 1.2867 could prevent a meaningful acceleration towards the 1.3000 zone.
In a nutshell, GBPUSD displays a cloudy short-term outlook, poised to give up more ground if the 1.2670 floor collapses.
