GBP/USD rallied yesterday, breaking above Monday's peak of 1.3135. The pair continues to trade above the prior medium-term downside resistance line drawn from the peak of the 10th of May, as well as above the short-term upside line taken from the low of the 15th of August. In our view, these technical signs suggest that Cable may be poised to continue trading higher for a while more.
If the bulls manage to take charge again soon, then we may see them driving the pair up for a test near the peak of the 26th of September, at around 1.3215. A decisive move above that hurdle could pave the way for the 1.3280 zone, slightly below the high of the 20th of September. That zone also provided good resistance from the 10th until the 17th of July.
That said, before the next positive leg, we see a decent chance for the pair to correct a bit lower, perhaps back below 1.3135. The bulls may decide to re-enter the action from near 1.3100, but even if this is not the case, we would still consider the near-term outlook to be somewhat positive as there would still be a possibility for the rate to rebound from near the 1.3030 support or the upside line drawn from the low of the 15th of August.
Our view for a possible setback is derived by our short-term momentum indicators. The RSI has topped fractionally below its 70 line, while the MACD, although above both its zero and trigger lines, shows signs of slowing down and that it could start topping as well.
We would like to see a clear dip below the psychological zone of 1.3000 before we start examining whether the near-term picture has turned negative. Such a move could confirm the break of the short-term upside line and may initially aim for the 1.2940 support. Another break below 1.2940 could pave the way for the 1.2900 mark.
Disclaimer:
The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. JFD Brokers, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD Brokers analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyzes and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyzes and must therefore be viewed by the reader as marketing information. JFD Brokers prohibits the duplication or publication without explicit approval.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with the Company. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please read the full Risk Disclosure.