GBP/USD Calls For Bullish Reversal Near 1.3670 Support

GBPUSD could be due for an upside correction following the stabilization near the key 1.3670 support region.

Even though the new bearish cross between the 20- and 50-day simple moving averages (SMAs), which is the first since September, suggests the continuation of the short-term downtrend, the RSI is regaining ground towards its 50 neutral level. Meanwhile, the Stochastics have already set up a bullish cross below the 20 oversold mark, signaling a pickup in positive momentum.

The 1.3755 – 1.3777 area has been rejecting upside movements over the past few sessions, therefore a clear breach of that wall may bring new buyers into the market, likely sending the price towards the upper line of the descending channel around 1.3860, where the 50-day SMA is also positioned. Running higher, the bulls may take a rest within the 1.3900 – 1.3950 area before a tougher battle takes place near the 1.4000 hurdle. Additional gains from here would push for an uptrend resumption beyond 1.4135.

Otherwise, a decisive close below the floor of 1.3670 may stretch towards the bottom of the channel, likely charting a new lower low within the 1.3600 – 1.3560 region. Traders will also pay great attention to the crucial zone of 1.3500 - 1.3480, where any violation would put the price back below the 2019 and 2020 highs, neutralizing the long-term outlook.

In brief, GBPUSD may attempt to recover some losses in the near term, although the trend signals remain bearish. For a meaningful rebound, the pair should cross above the downward-sloping channel and the 1.3870 level.

GBPUSD

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