After three weeks of losses, finally GBP/USD showed some strength and it closed last week in the green. That said, it is important to mention that, overall, the pair is still below its upwards moving trendline, taken from the 9th if April last year. But judging from last week’s good performance, we could expect some more recovery to the upside, at least for the short-run.
OUTLOOK (SCENARIO A / B)
The pair broke through its important area of resistance at 1.3215 on Wednesday, this way indicating, that the bulls are willing to stay in control over GBP/USD, in order to lift it back up to its June levels. The pair is near its key resistance level at 1.3315, a break of which could take Cable to test the 1.3475 level, marked near the highest point in June. We could see the buying momentum slowing down for a bit, but if the bulls decide to give the pair another push, then a break above that level could set the stage for the 1.3620 barrier, marked by high of the 10th of May.
The RSI is slightly above 50, which could be taken as bullish sign, and the MACD, even though below zero, is above its trigger line and moving higher. We can also see a positive divergence on the RSI and the MACD indicators, which also supports the upside scenario.
On the other hand, a break back below the 1.3215 area would be a sign of weakness and GBP/USD could continue its decline back down towards the 1.3050 hurdle, which is near the lowest point in June. Slightly below that hurdle lies the psychological 1.3000 zone, which could also get tested.
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