Morning Market Update – GBP/USD

GBP/USD recovers mildly today but it’s staying in a corrective pattern from 1.3116. Intraday bias remains neutral first. We’d continue to expect strong support from this level to contain downside and bring rally resumption. A break of 1.3158 will turn the bias back to the upside for the 1.3225 support-turned-resistance next. A break there will target at 1.3248.

Looking at the bigger picture, current development argues that the long term trend in GBP/USD has reversed. That is, a key bottom was formed back in 1.3116 on a bullish convergence condition. The current rise from 1.3116 will target a retracement of 21.3158 at 1.3225 next. In any case, the medium term outlook will now stay bullish.

On a strong breakout the market is looking for confirmation that the move will not simply and quickly be retraced. There has been a bit of a wobble on the pair breakout, but as yet it is holding. The recent strong candle breakout was followed by a corrective move which has gained some momentum. However the retracement has bounced today from the previous breakout support band 1.3116, having posted a low at 1.3049. The longer the market holds on to this band of old resistance that has turned into new support, the more confident the bulls will be. Momentum is still strong with the oscillator above 70 rising. The next task is for the bulls to breakout above the high at 1.3225 and to continue the bull-run. The four-hourly chart shows an unwinding of near term momentum to levels where the bulls have tended to support. A subsequent upside resistance is at 1.3225. The bulls will remain in control above 1.3116.

The GBP/USD pair tested the key support at 1.3049 in recent days and keeps its stability above it until now, which keeps the chances valid to continue the bullish trend. The price needs to rally upwards to breach 1.3158 to get a strong positive motive that reinforces the expectations of targeting the bullish channel’s resistance that rises now to 1.3225.

Therefore, we will continue to suggest the bullish trend in the upcoming sessions unless breaking 1.3116 and holding below it, as this break will push the price for more bearish correction on the intraday basis and visit the 1.3049 level before any new attempt to rise.

Expected trading range for today is between 1.3116 support and 1.3225 resistance.

Expected trend for today: Bullish