- GBP/USD consolidates below 1.4170 in the Asian session.
- Pair reverses gains from multi-month high near 1.4230.
- Negative Divergence in momentum oscillator throws caution on aggressive bids.
The GBP/USD pair trades cautiously on Wednesday morning. The pair licks its wound after falling sharply from the highs of 1.4248 in the previous session.
At the time of writing, GBP/USD is trading at 1.4161, up 0.8% for the day.
GBP/USD daily chart
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On the daily chart, the pair has been facing a stiff resistance barrier near the 1.4200 mark. The double top formation in the vicinity of the 1.4245 area makes it hard for GBP/USD to continue with upside momentum.
The bulls could experience corrective pullback on the premises of double top, a bearish reversal formation. The GBP/USD price is then likely to test the 23.6% Fibonacci retracement, which extends from the lows of 1.3669, level at 1.4100.
The negative divergence in the Relative Strength Index (RSI) indicator implies a significant downward reversal in price. In doing so, the bears would march toward the 50-day Simple Moving Average (SMA) at 1.3930.
The next area of support would occur at May 16 low at 1.3857.
Alternatively, if price sustained above the session’s high at 1.4164, then it could retest the previous day’s high at 1.4248. The price action would then look out for the levels last seen in 2018 with February highs near 1.4280 followed by the April highs at 1.4376.
GBP/USD Additional Levels
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