GBPUSD inches to 29-month low, bears dominate [Video]

(Melina Deltas, CFTe – XM)

GBP/USD inches to 29-month low, bears dominate

GBPUSD inched to a new 29-month low of 1.1716 early on Tuesday, increasing the risk for a downtrend extension below July’s trough of 1.1758. The ongoing bearish correction follows the pullback from February’s resistance line.

The RSI is close to its 30 oversold level and the stochastics are near spring’s lows, making a rebound in the price possible. Yet, as long as the indicators keep sloping downwards and the MACD gains negative momentum below its red signal line, the base scenario is for the pair to keep diminishing.

Once the 1.1758 support gives way, the price could initially take a breather around 1.1670 last active in March 2020 before plummeting towards the channel’s lower boundary and the 2020 bottom of 1.1500 – 1.1408. Additional declines from here may next pause near the 1.1300 psychological mark.

In the event of an upside reversal above the 1.1820 barrier, the spotlight will turn again to the resistance line currently around 1.2000. Slightly higher, the 20- and 50-day simple moving averages (SMAs) both at 1.2073 could then immediately tease any further improvement towards the previous high of 1.2292 and the 1.2300 number.

Summarizing, GBPUSD is still under bears’ control in the short- and long-term picture. A decisive step below 1.1758 is expected to generate additional selling pressures.

EUR/JPY still consolidating below the downtrend line

EURJPY is diving back below the near-term falling trend line and the 38.2% Fibonacci retracement level of the down leg from 124.40 to 144.25 at 136.75. The neutral to bearish picture in the short-term looks to last for a while longer after prices failed to break above the descending line and the 138.40 resistance.

The negative bias in the near term is supported by the deterioration in the momentum indicators. The %K line of the stochastic oscillator has fallen sharply after the pullback from the overbought region and posted a bearish crossover with the %D line. The RSI is flatlining below the 50-neutral level, suggesting any upside correction will be weak.

If prices continue to head lower, support should come from the 134.90 barrier before tumbling to the 50.0% Fibonacci of 134.30 and the 200-day simple moving average (SMA) at 134.07. A drop below these lines would reinforce the bearish view and open the way towards the 132.60-133.40 support zone.

However, should an upside reversal take form, immediate resistance will likely come from the 38.2% Fibonacci of 136.75 ahead of the 40-day SMA at 138.40. A break higher could shift the bias to slightly bullish with the next resistance coming from the 23.6% Fibonacci of 139.55.

All in all, EURJPY has been neutral to bearish in the short-term timeframe and any moves beneath the 200-day SMA would endorse the bearish scenario.