The GBPUSD currency pair is currently trading below a falling trendline visible on the 4-hour chart timeframe. This technical setup suggests that the broader downtrend from the 1.2709 high remains firmly in place for now.
As long as GBPUSD continues to respect that falling trendline resistance, the path of least resistance appears to be for a continuation of the current bearish momentum. The next key target that sellers will be eyeing on further downside is the 1.2200 handle.
However, traders will want to closely monitor the price action around that trendline resistance area in the coming sessions. A breakout above the trendline could potentially open the door for a more significant corrective bounce within the larger downtrend from the 1.2893 peak set earlier this year.
If GBPUSD manages to clear the trendline resistance, the first upside target to watch arrives at the 1.2435 level. A push through 1.2435 would be an even more compelling technical signal that a lengthier corrective upswing may be underway. In that scenario, the next key resistance zone to monitor is the 1.2570 area, followed by the 1.2630 region.
But for now, the overall technical bias remains bearish as GBPUSD continues to trade below that 4-hour falling trendline resistance area. Traders will be watching the trendline closely for potential breakout signals in either direction.
To the downside, a trendline hold could open the path for a potential extension towards the 1.2200 target zone in line with the dominant downtrend off the 1.2709 highs. Conversely, an upside trendline break would shift the focus higher toward 1.2435 initially, with a move beyond that level signaling a more substantial corrective rally could be taking hold.
The key levels to monitor are the falling trendline resistance area for potential breakout signals and the 1.2200 handle on the downside for any signs that sellers remain in control of the dominant bearish trend. On the topside, the 1.2435 and 1.2570 zones will be watched closely for any indications of a more significant bullish reversal threat developing.