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  • GBP/USD witnessed some heavy selling on Tuesday and dived to over four-week lows.
  • A sustained break below the 1.3125-30 confluence support aggravated the selling bias.
  • The 1.3000 mark ahead of August lows seems to be the next relevant target for bears.

The GBP/USD pair continued losing ground through the mid-European session and dived to over four-week lows, around the 1.3020 region in the last hour.

Increasing risk of a no-deal Brexit continued weighing heavily on the British pound. This coupled with a strong pickup in the US dollar demand further contributed to the pair’s steep decline on Tuesday, marking the fifth consecutive day of a negative move.

A sustained breakthrough a one-month-old ascending trend-line support, around the 1.3125-30 region, was seen as a key trigger for intraday bearish traders. The mentioned area coincided with 200-SMA on the 4-hourly chart and a subsequent weakness below the 1.3060-50 region might have already set the stage for an extension of the ongoing corrective slide.

The bearish outlook is further reinforced by the fact that oscillators on the daily chart have just started drifting into the bearish territory. However, oscillators on hourly charts are already flashing extremely oversold conditions. This, in turn, warrants some caution for aggressive traders and placing fresh bearish bets.

That said, the pair still seems vulnerable to break below the key 1.3000 psychological mark and accelerate the slide towards August swing lows, around the 1.2980 region. Some follow-through selling should pave the way for a further near-term depreciating move.

On the flip side, any attempted recovery back above the 1.3060 area now seems to confront a stiff resistance. This is followed by the 1.3100 mark and subsequent move up is likely to remain capped near the trend-line support breakpoint, now turned resistance near the 1.3130 zone.

Gold 4-hourly chart

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Technical levels to watch