The GBP/USD has been choppy all August long, but the overall price action has been bullish. The 4H chart shows the market in a rising wedge during August so far moving toward a key resistance at 1.5775. There is no strong bullish momentum in the current rally as the RSI failed to tag 70. The moving averages in the 4H chart are however in bullish alignment.
The daily chart shows the market near an ascending triangle resistance. In the daily chart the moving averages are no in directional alignment, reflecting sideways action as it whips back and forth each others.
Both price and RSI action is about to challenge the bearish bias in the market, which was established by the dip in May. If price can break above 1.5775 and the RSI rises above 60, we are extending the correction and killing that bearish momentum from May. Price would also NOT be held under the 200-day SMA anymore.
The upside opens up some resistance pivots from earlier in the year, first one at 1.5934 from February. If the market holds below 1.5775, our maximum bearish outlook in the short-term should be 1.56, where the rising trendline support is. A break below this handle and the support, then opens up other support pivots at 1.54 and 1.5265.
GBP/USD Daily Chart 8/17/2012 9:32AM EDT