GBP/USD gains some confidence for new higher high [Video]

GBPUSD returns above key support trendline, reduces negative risks.
Technical signals are encouraging for a continuation to 1.2850-1.2900.

Christina Parthenidou XM

GBPUSD stepped on the 20-day simple moving average (SMA) and climbed back above the broken short-term support trendline from October at 1.2720, reviving hopes that the soft four-day bullish wave could gain extra legs in the coming sessions.

The positive trajectory in the RSI and the stochastic oscillator is endorsing the bullish case, increasing the odds for a bounce towards the 1.2850-1.2900 resistance region. Note that the short-term ascending line from November 2023 is passing through this area. Hence, a decisive close above it could encourage a direct flight towards the 1.3000 psychological mark and the tentative ascending line, which connects the highs from October and November.

On the downside, the 20-day SMA will remain under the spotlight at 1.2686. A break below that line is expected to see a test near the crucial floor of 1.2610. If the bears drive below that base, confirming a negative head and shoulders pattern, the price could tumble towards its 50- and 200-day SMAs, which are currently trying to complete a golden cross around 1.2532. Additional declines from there might last till the 2020 upward-sloping trendline at 1.2400, unless the 1.2460 barrier blocks the way down.

All in all, GBPUSD has restored some optimism in the short-term picture after the close above the 1.2720 bar. Overall, the outlook may not deteriorate unless the 1.2610 floor cracks.

Author

Christina Parthenidou

Christina joined the XM investment research department in May 2017. She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics.

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