GBPUSD is taking a break from its recent selloff as the pair found support at a long-term area of interest. The daily chart shows price stalling at the 38.2% Fibonacci retracement level, which lines up with a former resistance zone.
Stochastic is also confirming this potential pickup in buying pressure, as the oscillator is starting to move out of the oversold zone. MACD is also reflecting oversold conditions, with the potential return of buyers likely to trigger a strong bounce.
In this case, GBPUSD could make its way back up to the previous highs near the 1.7200 major psychological level eventually. Of course this mostly depends on the outcome of UK events this week, which include the release of the BOE minutes and the Scottish referendum.
A weak rally might last until the near-term area of interest at the 1.6500 major psychological level, as the upcoming FOMC statement might also renew demand for the US dollar. A break below the pair’s current levels could lead to a test of the 1.6000 major psychological support zone.
By Kate Curtis from Trader’s Way