GBP/USD Pusing Above 1.56 to Test Declining Trendline in Daily Chart

GBP/USD

The 4H chart shows some bullish signs for the GBP/USD. Since last week, the market has been rallying in an upward channel, anchoring above a larger channel seen in the 4H and daily chart. This has pushed the RSI above 70 to establish at least short-term bullish momentum. Price action pushed above 200 4H Simple Moving Average as well during this breakout, and price action is confirming the bullish intent as it pushes above 1.56 in the 1/24 US trading session.

However, there is still another barrier for bulls to cross to extend the bullish outlook. The daily chart shows a declining trendline going back to August 2011 from the 1.6616 high. Starting with the pivot at 1.5680, the market then opens up1.5770, which is also 38.2% retracement. We can see a coincidence of 50% retracement at 1.5924 with the support area of the Oct-Nov 2011 consolidation which is closer to 1.59. Finally, 1.6080-1.61 represents 61.8% retracement and the highs for that Oct-Nov consolidation period. This bullish outlook however first requires a strong push above the current declining trendline seen in the daily chart.