Rebounding slightly off of support at 1.5900, the GBPUSD could be in for another leg lower as momentum looks to be waning in afternoon trade.  Currently, the currency pair is trading at 1.5951, just below resistance at 1.5975.

The 1.5975 barrier is key to the short term scenario as it is being supported by a resistance barrier above at 1.5981 or the 38.2% Fibonacci retracement level from the 1.5690-1.6169 bull wave.  Since the currency pair has broken through this level to the downside, it now acts as a major resistance barrier.  In addition, technical oscillators are indicative of a move lower in the short term.  Stochastic readings have moved higher to show a trade of 73, just below the 80 benchmark reading for an oversold environment.  Relative strength index scores are also approaching oversold conditions, rising to a reading of 49.35 – short of the 70 level.

GBPUSD 15-minute timeframe – Source:  FXTrek Intellicharts

The fact that both indexes haven’t yet reached their oversold marks leaves the potential for the currency to move a bit higher before sinking lower.  This would incorporate not only a failure to break above the 1.5975 barrier, but also a breakthrough 1.5925.  Should the currency pair fall through the 1.5925, there is a high probability that the pair will continue to sink until support is met at the 1.5889 session low.

Conversely, any move to 1.6000 will be built on a break of the aforementioned 1.5975 in the 15-minute timeframe.