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Bears flirting with daily lows, descending channel support

  • GBP/USD edges lower along a short-term descending channel on hourly charts.
  • Bears are likely to wait for some follow-through weakness below the 1.2500 mark.

The GBP/USD pair maintained its offered tone through the mid-European session and is currently placed near daily lows, around the 1.2530-25 region. The mentioned region marks the lower end of a descending trend-channel formation on the 1-hourly chart.

This is closely followed the key 1.2500 psychological mark, coinciding with the 38.2% Fibonacci level of the 1.2247-1.2644 move up. Failure to defend the channel support might be seen as a fresh trigger for bearish traders and prompt some technical selling.

The pair might then accelerate the fall further towards 50% Fibo. level support near mid-1.2400s before extending the downward trajectory towards challenging to 1.2400 confluence region. The latter comprises of 200-hour SMA and 61.8% Fibo. level.

Some follow-through selling will negate any near-term positive bias and pave the way for the resumption of the pair’s prior well-established bearish trend.

On the flip side, the 1.2570 region – representing the trend-channel resistance – might continue to keep a lid on any attempted move up. A convincing break through should lift the pair back above the 1.2600 mark, towards the 1.2640-45 supply zone.

The said hurdle marks a double top region near the very important 200-day SMA, tested twice in April. This, in turn, should act as a key pivotal point that should help traders determine the pair’s next leg of a directional move.

GBP/USD 1-hourly chart

Technical levels to watch

 

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