Written on 25/05/2020 by Theunis Kruger, FX Trainer at FXTM
The GBPUSD currency pair, on the D1 time-frame, was in an uptrend until April the 14th when a higher top was recorded at 1.26471. The bears found the price attractive and supply overcame demand.
After the higher top at 1.26471, the market structure changed and lower tops and bottoms followed. The price broke through the 15 and 34 Simple Moving Averages and the Momentum Oscillator crossed into bearish territory by breaking the zero baseline.
A possible critical support level formed when a bottom was recorded on May the 18th at 1.20739. Buyers tried to push the market higher but could not maintain the demand pressure and a lower top formed on May the 19th at 1.22961.
If the GBPUSD breaks through the critical support level at 1.20739, then three possible price targets may be calculated from there. Applying the Fibonacci tool to the bottom of the support level at 1.20739 and dragging it to the top of the resistance level at 1.22961, the following targets might be considered. The first target could be projected at 1.19366 (161 %). The second price target might be considered at 1.17144 (261.8%) and the third and final target may be expected at 1.13549 (423.6%).
If the 1.22961 resistance level is broken, the anticipated price targets above are null and void, because, from a structural point of view, it will no longer be a downtrend.
As long as sellers maintain a negative attitude and supply overcomes demand, the outlook for the GBPUSD currency pair on the Daily time-frame will remain bearish.
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