Forex Technical Update
The GBP/USD started the week with a corrective rally. The rally has so far shown a loss of bearish momentum in the very short-term as the 1H RSI broke above 60. Failing to break above 70 however the RSI reading reflects a weak bullish attempt so far. On the way back down, there are some near-term pivots at 1.5520, but a break below 1.55 is probably needed for the bearish outlook to return. Even then, the decline can be a bear trap before further correction, so watch out for support again near the 1.5430 area. Below last week's low, we have the 1.5345 level as support before opening up a swing projection to 1.48 (seen in the weekly chart of the previous update).
The 4H chart shows that a declining channel is still intact after the current correction. A break above 1.56 and the channel resistance thus opens up further corrective outlook, first toward the 1.57, 38.2% retracement level which is reinforced by a pivot. If a subsequent throwback respects 1.56 as support, we are likely to see extended correctio rally, perhaps toward 1.58, near 50% retracement. The 61.8% retracement which is near the 200 period SMA in the 4H chart, and a previous pivot area in the 1.5890-1.59 area. a break above this resistance cluster puts away the bearish outlook in the medium term.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources