GBPUSD continues to range-bound between the 50-day simple moving average (SMA) and the tough resistance of 1.4000 for the second week, refusing to chart a new lower low below 1.3774.
The short-term signals, however, remain discouraging as the 20-day SMA is slowly converging to the downside and towards the 50-day SMA, while the momentum in the RSI and the MACD keeps weakening, with the former having inched below its 50 neutral mark and the latter preparing to exit the positive zone.
A clear close below the 50-day SMA and the 1.3800 level is expected to generate a steeper decline towards the 38.2% Fibonacci of the 1.2674 – 1.4235 up leg at 1.3639. If more sellers join the market from here, pressing the pair below the Ichimoku cloud, the spotlight will shift to the 50% Fibonacci of 1.3455.
On the upside, the 23.6% Fibonacci of 1.3867 has been squeezing upside corrections over the past couple of days, therefore any violation here, and more importantly a step above the 20-day SMA, could bring the major resistance of 1.4000 back into view. Should the bulls breach that border too, buyers could see another battle within the 1.4135 – 1.4235 crucial area, a break of which may stall near the 1.4350 barrier.
In brief, GBPUSD is currently facing a neutral-to-bearish bias in the short-term picture. A drop below the 50-day SMA could confirm additional negative extensions towards 1.3639.