GBP/USD Technical Analysis: Risks are skewed to the downside

• As seen in the daily chart, the GBP/USD pair closed at1.2960 on Monday, confirming a downside break of the trendline connecting the Aug. 15 low and Oct. 4 low.
• The pair failed to hold on to gains above the trendline resistance (former support) yesterday, reinforcing the bearish view put forward by the downside break of the diagonal line on Monday.
• At 44, the relative strength index (RSI) is biased toward the bears. The MACD is signaling that the bearish momentum is gathering pace.
• The momentum studies - 5-day, 10-day, and 21-day EMAs - are trending north indicating a bearish setup.
• As a result, the odds are stacked in favor of a drop to 1.2905 (61.8% Fib R of 1.2662/1.3299).
• The bearish view would be invalidated only above the 10-day EMA.

Daily chart

Spot Rate: 1.2980

Daily High: 1.2991

Daily Low: 1.2973

Trend: Bearish

Resistance

R1: 1.3024 (trendline resistance)

R2: 1.3046 (10-day EMA)

R3: 1.3063 (50-day EMA)

Support

S1: 1.2937 (previous day's low)

S2: 1.2905 (61.8% Fib R of 1.2662/1.3299)

S3: 1.2812 (76.4% Fib R of 1.2662/1.3299)