GBP/USD technical analysis: Fibonacci support holds
GBP/USD technical analysis indicates that the GBP/USD pair may need to test lower before it can head higher again. Watch out for the formation of a double-bottom pattern if the February monthly low holds.
The British pound moved sharply lower against the greenback last week as traders dumped sterling over British PM Boris Johnson’s hard-line stance towards Brexit negotiations.
GBP to USD analysis shows that the pair needs to continue defending major Fibonacci support to avoid more protracted losses towards the 1.2500 level.
GBP/USD medium-term price trend
Sterling came back under heavy selling pressure last week over renewed market fears about Brexit negotiations, and the likelihood of the UK departing the EU without a deal.
Additional pressure was also placed on the British pound on Monday, after the Bank of England noted they may consider cutting rates this month.
GBP/USD technical analysis shows that the pair could start to recover higher if bulls can continue to defend major Fibonacci support.
The GBP/USD pair has experienced a bounce from the 50 percent Fibonacci retracement of the current 2020 high to the 2019 yearly low, around the 1.2750 area.
Furthermore, the GBP/USD pair is attempting to recover above major trendline support, around the 1.2770 level. As long as bulls can continue to defend this key technical region, a medium-term recovery remains possible.
Gains above the 1.2770 level could provoke a rebound towards the 1.3060 level, while losses under the mentioned support region could provoke further losses in the GBP/USD pair towards the 1.2550 area.
GBP/USD short-term price trend
The four-hour time frame shows that the GBP/USD pair has a strong bearish short-term bias while price trades below the 1.2990 level.
GBP/USD technical analysis shows that the pair has reached its overall short-term bearish target after finally breaking out from a triangle pattern on the lower time frames.
Technical traders may need further confirmation that sterling has stopped making bearish monthly and weekly lower lows before initiating new buy positions.
The one-hour time frame shows that key technical resistance is located at the 1.2850 and 1.2900 levels.
Failure to surpass these short-term bullish targets may result in a slump back towards the 1.2770 to 1.2850 technical area.
Overall, watch out for the formation of a bullish double-bottom pattern if the February monthly low holds firm.
GBP/USD technical summary
GBP to USD analysis shows that the pair could test towards key Fibonacci and trendline support before deciding on its next major move. Traders will be closely watching the 1.2750 to 1.2770 technical area.