GBP/USD traded in a consolidative manner yesterday and today in Asia and Europe, staying between the 1.3365 and 1.3415 barriers. Overall though, the pair remains below the downside resistance line drawn from the high of Jan. 14, and thus, we would consider the short-term outlook to be negative.
A clear break below the 1.3365 barrier would confirm a forthcoming lower low and pave the way towards the 1.3275 zone, marked by the inside swing high of Dec. 21. If the bears are unwilling to stop there and decide to break lower, we could see them pushing towards the 1.3200 territory, marked by the low of Dec. 21, or the 1.3173 zone, which acted as a temporary floor between them on Dec. 8 and 20.
Taking a look at our short-term oscillators, we see that the RSI rebounded and exited its below-30 zone, while the MACD, although below both its zero and trigger lines, shows signs of bottoming as well. Both indicators detect downside speed, which is in line with further declines, but they are turning up, making us careful over a potential corrective rebound before the next leg south.
To start examining a bullish reversal, we would like to see a clear break above 1.3525, a resistance marked by the high of Jan. 26. This could signal the break above the downside line taken from the peak of Jan. 14 and may pave the way towards the 1.3605 barrier, the break of which could carry extensions towards the high of Jan. 20, at 1.3660, or the peak of Jan. 17, at 1.3690.