GBPUSD Analysis – May 17, 2023

The GBPUSD pair experienced a brief encounter with the 1.2540 resistance level, only to pull back and establish a trading range between 1.2442 and 1.2540. This price action suggests that the pair remains within a downtrend, which has been in place since the high at 1.2679. Traders should be mindful of the potential for further downside movement as the consolidation phase unfolds.

The current sideways movement between 1.2442 and 1.2540 indicates a period of indecision and balance in the market. However, it is important to note that the prevailing downtrend remains intact. Traders should closely monitor the price action for a potential breakdown below the support level at 1.2442, which could indicate a resumption of the downward trajectory. In such a scenario, the next target for sellers would likely be around the 1.2350 level, followed by 1.2280.

On the upside, the GBPUSD pair faces immediate resistance at 1.2540, which has proven to be a significant barrier for the bulls. Additionally, there is a rising trend line on the 4-hour chart that is acting as a resistance level. A decisive breakout above these resistance levels would be required to suggest a potential reversal or a significant upside move. Such a breakout could lead the pair towards the 1.2700 level.

In conclusion, GBPUSD remains within a downtrend as it retraced from the 1.2540 resistance level and entered a trading range. Further decline is expected if the pair breaks below the support at 1.2442, with potential targets at 1.2350 and 1.2280. Resistance levels to watch are at 1.2540 and the rising trend line on the 4-hour chart. A clear breakout above these resistance levels would be required to indicate a potential shift in the current downtrend, leading towards 1.2700. Traders should carefully assess the price action and monitor key developments to navigate the GBPUSD market effectively.