GBP/USD Price Analysis: Establishment above 1.2000 is a prerequisite for further upside
|- Upbeat market sentiment has strengthened the Pound Sterling.
- A breakout of a VCP results in wider ticks formation and heavy volume.
- The formation of a Rising Channel indicates that the broader trend is towards the north.
The GBP/USD pair is displaying a sideways performance in the early Tokyo session after a juggernaut rally to near 1.2080. The Cable witnessed an immense buying interest after sustaining above the round-level resistance of 1.1900. A significant improvement in investors’ risk appetite strengthened the Pound Sterling.
Meanwhile, the US dollar index (DXY) has dropped 106.00 despite a firmer jump in the US Durable Goods Order data. It seems that less-hawkish cues on interest rate guidance from the Federal Open Market Committee (Fed) minutes have impacted the US Dollar. Investors should know that US markets are closed today on account of Thanksgiving Day.
On a daily scale, the Cable has delivered a breakout of a Volatility Contraction Pattern (VCP) that results in the formation of wider ticks and heavy volume. Broadly, a Rising Channel formation satisfies the condition of a long-term upside trend. Also, advancing the 20-period Exponential Moving Average (EMA) at 1.1738 adds to the upside filters.
Adding to that, the Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which indicates that the upside momentum is active.
Going forward, the mighty 200-period EMA at 1.2110 could be a hurdle for the Pound Sterling bulls.
For further upside, the asset is required to establish firmly above the psychological resistance of 1.2000. But for a run-up, the Cable is needed to overstep the 200-EMA at 1.2110 firmly, which will drive GBP/USD towards the round-level resistance of 1.2200, followed by August 2 high at 1.2280.
On the flip side, a drop below Monday’s low at 1.1780 will drag the asset toward November 14 low at 1.1710. A slippage below November 14 low will expose the asset to the horizontal support plotted from October 27 high at 1.1646.
GBP/USD daily chart
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