GBPUSD Technical Analysis Summary

In a recent analysis of the GBPUSD currency pair, the focus is on the critical 1.3550 level, which has become a battleground between sellers and buyers. The analysis highlights a two-leg decline that began from a session high of 1.3661.

Market Movements

The first leg of the decline saw the GBPUSD drop from 1.3661 to 1.3550 during the late Asian and early European sessions. This move was characterized by strong momentum, with sellers effectively pushing through intraday support levels. The subsequent bounce back to 1.3606, which represents the 50% retracement of the initial drop, was deemed corrective rather than impulsive, indicating that sellers were still in control.

Second Leg of Decline

Following the bounce, the second leg of the decline commenced, with the price moving down from 1.3606 to a new low of 1.3494. This break below the previous low of 1.3550 reinforced the notion that rallies were being sold off, establishing a pattern of lower highs and lower lows, indicative of a shift in short-term control towards the downside.

Current Market Conditions

Since reaching the low of 1.3494, the GBPUSD has experienced a rebound, but it has only managed to return to the 1.3550 level, which now serves as a significant technical barrier. This level is crucial for several reasons:

• It represents former support that has now turned into potential resistance.
• It aligns with the 50% retracement of the move from 1.3606 to 1.3494.
• It is just above the 61.8% retracement of the broader trading range, which is near 1.3549.

Key Technical Insights

The 1.3549–1.3550 area is identified as a key zone that could define the short-term market bias. If the price remains below this level, sellers are likely to maintain their advantage, potentially leading to another test of the 1.3494 low or even further declines if momentum builds. Conversely, if buyers can reclaim and hold above 1.3550, it would suggest that the immediate downside pressure is easing, with the next target being the prior corrective high at 1.3606.

Conclusion

The analysis concludes that the market has clearly defined its current battleground, characterized by two legs down, a corrective bounce, and a significant retracement ceiling overhead. Traders are advised to monitor the 1.3550 level closely, as it will provide insights into market direction. Until buyers can prove otherwise, the prevailing sentiment favors sellers.