The GBP/USD pair, after a four-day winning streak, is trading lower near 1.2750 during the early European session on Tuesday, signaling a critical juncture and the potential for further downward pressure. The 21-day Exponential Moving Average (EMA) at 1.2684 stands as a crucial support level, and a breach below it could indicate increased selling pressure, potentially leading the pair towards the major support at 1.2650. This level, coupled with the 23.6% Fibonacci retracement at 1.2643, adds technical significance to the support zone.
Despite the near-term challenges, positive signals emerge from the technical indicators. The 14-day Relative Strength Index (RSI) positioned above the 50 level suggests bullish momentum, aligning with the notion of an overall upward outlook for the GBP/USD pair. An RSI above 50 typically indicates prevailing buying pressure.
The Moving Average Convergence Divergence (MACD) indicator provides additional insights, as the MACD line is above the centerline, signaling potential upward momentum. However, caution may be warranted as the MACD line converges below the signal line, indicating a degree of investor hesitation.
On the upside, a move towards the previous week’s high at 1.2771 is plausible. A breach above this level could pave the way for the GBP/USD pair to explore the region around the psychological level of 1.2800, followed by December’s high at 1.2827. The outlook remains dynamic, and investors will closely watch key support and resistance levels for potential shifts in market sentiment.
