FX.co ★ Crude | GBP/USD

The GBP/USD pair is still trading in a relatively positive trend, but the recent developments indicate that the pair is somewhat losing its momentum with the pair clinging to the 1.3470 area. Structurally, the market has been improving on a rising channel over a couple of weeks, making highs and highs on the daily chart. Nonetheless, the latest decrease beneath the lower limit of this channel $ indicates the temporary weak and increases the chances of a more substantial corrective stage. Regardless of this, the larger bullish formation is yet to be negated, with price still retaining above critical dynamic supports. The correlation with the short-term and medium-term moving averages is encouraging the uptrend. The 9-day EMA is rising and it still trades above the 50-day EMA and the averages are moving upwards. This correlation is normally a sign of healthy bullish action and that buyers are still present on pullbacks. This is supported by the price remaining above the two moving averages since in most instances these averages serve as dynamic support in corrective stages. As far as daily closes are higher than the 9-day EMA around 1.3468, there is the maintenance of short-term strength in trends. A stronger indicator of the medium-term support is the 50-day EMA, which at the moment stands on the level of 1.3362. This moving average has directed the trend upwards and the bottom limit of the acceptability of a downward movement in the current structure. Any pullback to this would still be technically normal, and would not hurt the overall trend to get momentum back to normal. A lasting decline below this point would only point to a significant change in market structure and the possibility of the euphoric domination waning. According to price action, the pivot point of 1.3450 and 1.3470 is a near-term pivot. This zone indicates the present tastes of the market and buyers are trying to stabilize the price which has fallen slightly below the rising channel. Should price be able to resume acceptance within the channel it would indicate that the recent vulnerability was a correctional as opposed to structural issue. This kind of recovery would auger better a second thrust to the high end of the recent range. On the positive side, the nearest resistance is at 1.3534 which is the same level as the high of three months recorded in late December. This is technically significant, because this is the last swing top and the highest point of short term resistance. Closing above 1.3534 on daily basis would indicate the resurgence of the bullish movement and the buyers have regained their control. Above this, there is the next big zone of resistance at around 1.3726, which coincides with a high of six months and this is an important medium-term target of a continuation of the trend. Additional potential gains are toward the upper limit of the broader rising channel which is now estimated to be approximately in the 1.3750 area. This is a more distant technical target which would probably draw profit-taking should the target be reached. Nonetheless, a migration toward this area would need a strong stretch of bullish price action and support of vibrant averages, especially the 9-day EMA to follow short-term drags. The uptrend is supported by momentum conditions which are visible due to the RSI around 62.76. RSI staying far past the 50 midpoint indicates that the bullish trend is still in control though the price movement has since calmed down. No overbought readings indicate that the market has not yet reached maximum levels in case of the renewal of the buying pressure. Notably, stability of RSI in recent consolidation shows that the selling pressure has not been extreme to counter the momentum. On the negative side, lack of recovery of the rising channel may lead to further lateral or corrective movement. Any fall below the 9-day EMA would be an indication of a short-term weakness and any decisive fall below the 50-day EMA around 1.3362 would represent a significant correction. The focus would then be on the 1.3200 level then the stronger at 1.3010 which is a major longer term floor and a zone that has undergone previous consolidation. On the whole, GBP/USD is also in the uptrend, however, the current price dynamics indicate that the momentum is decreasing. The overall bullish framework would not be broken as long as the price maintains the value above the key moving average supports. Recovery exceeding 1.3534 would bolster the uptrend and open the way to the new resistance levels, whereas a long-term break under the dynamical supports would indicate the shift towards the more profound stage of corrections.