As indicated in yesterday’s analysis the GBP/USD has fallen below the 1.3000 support level and is currently trading at 1.2950. The decline is mainly attributed to the rebound in the USD. The US dollar index has moved up to 93.60 and appears to be going towards 94.00. The pair’s immediate support is at 1.2945 while stronger supports are present at 1.2900 and 1.2872. The intraday resistance is at 1.2978 another resistance is present at 1.3033.
A Fibonacci retracement drawn from a swing low at 1.20687 to a swing high at 1.3482 shows a support level (0.38%) at 1.2945 while the 50% retracement support is way below at 1.26025. If the pair manages to close below 1.2945 support level on the 4-hourly chart the downwards move may further accelerate. The RSI has gone below 50 and now appears to be entering in a further bearish zone. The MACD bearish crossover may have supported the bears and while it is still below the zero line it favors a further downwards move. However, given the big decline, the bulls may intervene and temporarily take the price higher once again for quick profit booking. Therefore, a recommended sell position can be taken only when the pair closes below the 1.2945 on the 4-hourly period. The ideal target would be between 50 to 60 pips and a decent stop-loss for this trade would be just above the 1.3033 resistance level.
An intraday closing below 1.2945 is likely to accelerate the downtrend and the possibilities of testing the 1. 26025 level would be increased.