GBP/USD outlook: Bulls are taking a breather after five-day rally

Slobodan Drvenica Windsor Brokers

GBP/USD

Cable eases from new multi-week high (1.2700) on Thursday, as bulls faced headwinds from significant resistances at 1.2700 zone, provided by the top of daily Ichimoku cloud and Apr 9-10 tops.

In addition, overbought conditions on daily chart prompted traders to partially collect profits from a five-day rally, which accelerated after US inflation data on Wednesday (GBPUSD advanced 0.8% for the day, in the biggest one-day gains since Apr 29).

Dips are likely to be shallow (so far held by broken Fibo 61.8% and daily cloud base) as overall picture is bullish (strong positive momentum / MA’s in bullish setup) and mark positioning for continuation of a larger uptrend from 1.2299 (Apr 22 low).

Broken 100DMA (1.2632) marks next support, followed by 55DMA (1.2601) and key supports at 1.2550/40 zone (Fibo 38.2^% of 1.2299/1.2700 / 200DMA) which should contain extended dips and keep larger bulls in play.

Risk-sensitive pound received fresh support from softer than expected US inflation numbers which may push the US central bank one step closer to eventual start of policy easing, as well as comments from some MPC hawks who favor unchanged BOE rates.

Markets await release of US weekly jobless claims, with last week’s figure above consensus (219K) to provide fresh tailwinds and push the price above pivotal 1.2700 barrier.

Res: 1.2700; 1.2709; 1.2753; 1.2784.
Sup: 1.2632; 1.2601; 1.2569; 1.2540.

Interested in GBP/USD technicals? Check out the key levels

1. R3 1.2823
2. R2 1.2755
3. R1 1.272
PP 1.2652
1. S1 1.2617
2. S2 1.2549
3. S3 1.2514

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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