Green line- bearish RSI divergence
Black lines- Bullish channel
GBPUSD has started the week on a positive note and is trading around 1.2530. Last week price broke out and below the bullish channel it was in. Today price is bouncing back testing the break down area. The decline from 1.2678 high is most probably over and price is now making a counter trend move. Forming a lower high is our expectation and the start of a new decline that will eventually push the Pound towards 1.2350. The RSI has barely reached oversold conditions and is bouncing. Key short-term resistance is found at 1.2588 where we find the 61.8% Fibonacci retracement of the recent decline from 1.2678. A daily close above this level would be a sign of strength. Failure to recapture 1.2588 will lead to another sell off towards 1.2350.
