GBPUSD is flirting with the 40-day simple moving average (SMA) after the pullback off the 1.3360 support level, remaining within the Ichimoku cloud.
The recent upside move is recovering the declining move from the 1.3750 barrier.
According to technical indicators, the RSI is approaching the 50 level with weak momentum, while the stochastic oscillator posted a bullish crossover within its %K and %D lines in the oversold territory. Both are suggesting a positive movement in the short-term timeframe.
If the market manages to pick up speed, the upper surface of the cloud could offer nearby resistance around 1.3500 ahead of the penetrated descending trend line and the 38.2% Fibonacci retracement level of the down move from 1.4250 to 1.3160 at 1.3580. A significant close above the latter would break the 50.0% Fibonacci of 1.3705, which overlaps with the 200-day simple moving average (SMA), raising chances for further increases.
Should prices decline, immediate support could be found around 1.3417, which is the 23.6% Fibonacci. Then a leg below that level, the pair could meet the 1.3360 support before the focus shifts to the one-year low of 1.3160 before plunging to 1.2855, taken from the low on November 2020.
In the long-term picture, the pair remains negative as it is still holding underneath the falling trend line and the 200-day SMA. However, in the very short-term, GBPUSD advances above the 40-day SMA, indicating a bullish correction.
