GBP/USD Is in an Upward Correction but May Face Rejection at 1.2540

Updated:

Key Resistance Levels: 1.4200, 1.4400, 1.4600
Key Support Levels: 1.3400, 1.3200, 1.3000

GBP/USD Price Long-term Trend: Bearish
GBP/USD is in a downtrend but may face rejection at 1.2540. Also, the uptrend is likely to face rejection at the 21-day line SMA. In other words, the pair will face resistance at level 1.2614. On April 28 price action, the Pound fell above level 1.2411 and consolidated above it before resuming selling pressure. On the upside, if the bulls break above the moving averages, and the bullish momentum is sustained, the bearish trend will be terminated.

GBP/USD Is in an Upward Correction but May Face Rejection at 1.2540
GBP/USD – Daily Chart

Daily Chart Indicators Reading:
Despite the upward correction, the Pound is at level 43 of the Relative Strength Index for period 14. The pair is in the downtrend zone and capable of a further downward move. The 21-day line and 50-day line moving averages are sloping downward indicating the downtrend.

GBP/USD Medium-term Trend: Bearish
On the 4-hour chart, the Pound has been trading in the overbought region. The brief uptrend is facing resistance at level 1.2498. The Pound is expected to retrace after reaching the overbought region. Meanwhile, on May 17 uptrend; a retraced candle body tested the 78.6% Fibonacci retracement level. The retracement indicates that the Pound will fall but reverse at level 1.272 Fibonacci extension or 1.2529.

GBP/USD Is in an Upward Correction but May Face Rejection at 1.2540
GBP/USD – 1 Hour Chart

4-hour Chart Indicators Reading
Meanwhile, the market is above the 80% range of the daily stochastic. The pair is trading in the overbought region of the market. Sellers will emerge to push prices down. The 21-day and 50-day SMAs are sloping upward indicating an uptrend.

General Outlook for GBP/USD
The currency pair is trading in the overbought region but may face rejection at 1.2540.. The Pound will fall as it is unable to sustain above the recent high. The 21-day SMA is acting as resistance to the prices. The Pound will further decline if prices break below level 1.2164

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.