Overall, on the bigger picture, the pair did not have a great year, as it is still trading below the year’s opening price, which is around 1.3507. But, from the short-term perspective, since the reversal to the upside on the 12th of December, GBP/USD continues to grind higher. It is also trading above a newly-formed short-term tentative upside support line, drawn from the low of the same day. Today, looking at the 4-hour chart, we are seeing a strong push higher, which lifted the rate above the 200 EMA. This adds more bullishness into the short-term outlook, as it increases the chances of seeing more recovery. For now, we will continue aiming higher.
GBP/USD could continue traveling in the upwards direction, where it might find good resistance near the 1.2812 area, marked by the high of the 6th of December. We could then see a bit of retracement back down, but if the pair fails to move below the 1.2725 zone, or even the aforementioned upside support line, this could be quickly picked up by the bulls again and GBP/USD may experience another leg of buying. If this time the 1.2812 hurdle fails to withhold the bull-pressure, we might see the pair pushing further up towards the next potential resistance at 1.2885. That resistance level is marked by the high of the 23rd of November.
Taking a quick glance at our oscillators, the RSI and the MACD, we can see that both are currently in support of more upside. The RSI is above 50 and is aiming for the 80 territory, by pointing to the upside. The MACD is in the positive zone, keeps on pointing to the upside and is above its trigger line.
The alternative scenario would be, if we would see a break below the aforementioned tentative short-term upside support line, drawn from the low of the 12th of December. But for a better confirmation of the downside, a drop below the 1.2615 hurdle, marked by the low of the 27th of December, could lead to further declines. This is when we could start examining a potential test of the 1.2530 obstacle, a break of which may force the rate to move for a re-test of December lows at 1.2475.
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