On the daily chart, GBPUSD continues its persistent downtrend, marked by a succession of lower lows and lower highs. The moving averages also reflect this bearish sentiment, with clear crossings to the downside. While the pair currently appears somewhat oversold, it's important to consider the possibility of a final downward move before any potential pullback toward the 1.23 handle.
From a risk management perspective, sellers may find another favorable entry point around the descending trendline, particularly when it aligns with the red 21 moving average. However, for a significant trend reversal, buyers will need to await a decisive break above the 1.26 handle.
This assessment offers a detailed perspective on GBPUSD's current state, outlining potential scenarios for both sellers and buyers.
On the 4-hour chart, a notable divergence with the MACD indicator is apparent, typically indicating a loss of momentum, often preceding pullbacks or even reversals. In this scenario, we could anticipate a retracement towards the minor downward trendline and the support-turned-resistance approximately at the 1.2440 level before another potential downward move.
Should the price manage to breach the trendline, it may trigger increased buying activity, potentially extending the rally towards the 1.2540 resistance level. However, it's worth noting that this is likely to attract stronger selling interest, providing traders with a more favourable risk-to-reward setup.
This analysis provides a detailed outlook for the 4-hour chart, considering potential price movements and key levels for both buyers and sellers.
Chris
Head Trader & Coach
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