GBPUSD climbed higher on Thursday but found resistance today at 1.1228, still below the short-term falling trend line taken from the August 10 high as well as below the falling line longer term from the March 23 high. This keeps the dominant downtrend intact, but given that the pair has been forming higher lows on the 4-hour chart this week, a break below 1.0765 may be needed to signal that the bears have regained full control.
The RSI is near its 70 line, but has been falling lately, while the MACD remains above its zero and trigger lines, still pointing up. The mixed indications provided by the oscillators reinforce the idea that traders may have to wait for clearer signals before becoming confident that the downtrend continues.
A dip below 1.0765 could confirm the break below the line connecting the upper lows formed this week and could encourage the bears to dip down to Wednesday’s low of 1.0540. If they don’t exit the action from there, a break down could take losses down to Monday’s low at 1.0325.
On the upside, a break above 1.1465 could confirm the break above the 200-period exponential moving average as well as the break of the downtrend line drawn from the August 10 high. That said, this can only signal a bigger upside. correction, perhaps towards the September 13th high at 1.1735 or towards the longer term bearish line taken in March. A trend reversal could be on the table with a decisive break above the 1.1900 area marked by the 26th August high.
In short, the GBPUSD extended its latest rally but remained below two major declining lines, keeping the prevailing downtrend intact. Nonetheless, the fact that the pair has recorded higher lows this week likely paints a neutral picture in the near term.