GBPUSD bulls facing the extreme bearish threat, strong support ahead

There has been a strong bearish threat in the GBPUSD pair after it breached the major support level at 1.34166. Majority of the short-term investors made a decent profit but shorting the GBPUSD pair at the major resistance level at 1.43377. Currently, the pair is slowly heading towards the major support level at 1.31288. This level is going to provide a significant amount of selling pressure to this pair since it backed up by 50% retracement level. From this level, we might see some decent bullish bounce and any bullish price action confirmation signal will be an excellent opportunity to execute long orders. However, a daily closing of the price below the 50% bullish retracement level will wipe out the existing bulls from the market.

GBPUSD daily chart analysis

Figure: GBPUSD heading towards 50% retracement level

From the above figure, you can clearly see the bulls are losing control of the market. However, prior to the closing of the last trading week, the bulls managed to exhibit some momentum. Buying the pair at the current price level will be immature since we don’t have any clear signal. If the bulls manage to take control of this market from this level, the first initial bullish target for this pair would the nearest critical resistance level at 1.35605. A daily closing of the price above that level will lead this pair towards the 100 day SMA which lies at 1.38772. This level should provide a significant amount of selling pressure to this pair and any bearish price action confirmation signal will be an excellent opportunity to execute short orders. On the downside, we need to break below the 50% retracement level to see strong bearish momentum.

GBPUSD weekly chart analysis

Figure: GBPUSD heading towards a major support level

In the above figure, you can clearly see the price has breached 38.2% Fibonacci retracement level. Currently, the pair is slowly heading towards the 50% retracement level and any bullish price action confirmation signal near that level will be an excellent opportunity to execute long orders. However, if the sellers manage to break the 50% retracement level, the pair will ultimately head towards the 61.8% retracement level. This level is very crucial for the long-term investors since a clear break of this level will confirm the end of a medium-term bullish trend for the GBPUSD pair.

Currently, the GBPUSD pair is trading at a very critical level and no investors have clear clue where the pair will head in the upcoming week. However, a highly reliable price action confirmation signal near the 50% retracement level will help the GBPUSD bulls to rally higher. On the contrary, a clear break of the 100 weekly SMA will eliminate the possibility of a bullish rally for the upcoming week. Fundamentally the U.S dollar is holding its ground pretty strong and we need a strong fundamental news release from the British economy to exhibit strong bullish surge. Considering the technical and fundamental factors of the market it’s better to stay on the sideline until the market exhibits clear momentum.