GBPUSD falls to a new six-month low, displaying signs of being oversold
- GBPUSD stuck in a steep decline since mid-July, appearing unable to recover
- Records consecutive multi-month lows as the bulls remain on the sidelines
- Given that momentum indicators are pointing at oversold conditions, can the price bounce back?
GBPUSD has been forming a structure of lower highs and lower lows since its 15-month peak of 1.3141. Meanwhile, in the near term, the RSI has entered its 30-oversold mark and the stochastic oscillator is touching its 20-oversold territory, both suggesting that the recent drop might be overstretched.
Should the downtrend resume, the price may initially face the 1.2000 psychological mark. A violation of that floor could pave the way for the March bottom of 1.1800. Failing to halt there, the pair could then descend towards the October 2022 resistance of 1.1644, which could serve as support in the future.
Alternatively, if the bulls re-emerge and push the price higher, the May low of 1.2307 could prove to be the first obstacle for the price to overcome. Breaking above that zone, the pair could test the December-January resistance zone of 1.2445. Further advances might then cease at the April resistance of 1.2547, which also acted as support in August.
In brief, GBPUSD seems to be in a relentless decline, but its end could be approaching as the pair has reached oversold conditions. Hence, traders should not rule out an impending bounce.