GBP/USD plummets to two-month low [Video]

GBP/USD tests 200-day SMA after strong sell-off.
Prices break trading range to the downside.
Outlook looks bearish in short-term.

Melina Deltas, CFTe XM

GBPUSD plunged to a new almost two-month low of 1.2517 on Monday’s session, falling beneath the short-term trading range and the 200-day simple moving average (SMA).

Currently, the market is recovering some losses with the RSI confirming the recent upside move as it is ticking slightly up below 50. On the other hand, the MACD oscillator is losing momentum beneath its trigger and zero lines, while the 20- and the 50-day SMAs are ready for a bearish crossover.

Should the bears press the price below 1.2495, the medium-term ascending trend line around 1.2300 may prevent an aggressive downfall towards the 1.2180 support level. If the latter gives way too, the decline could continue towards the 1.2035-1.2070 area, shifting the outlook to negative.

Alternatively, a climb back above the 200-day SMA and the 1.2610 resistance could meet the 20- and the 50-day SMAs at 1.2680 ahead of the 1.2780-1.2825 region. A climb above these levels could turn the outlook back to bullish.

All in all, GBPUSD is looking bearish in the very short-term timeframe after the tumble beneath the consolidation area; however, the market is still developing well above the medium-term uptrend line.

Author

Melina Deltas, CFTe

Melina joined XM in December 2017 as an Investment Analyst in the Research department. She can clearly communicate market action, particularly technical and chart pattern setups.

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