GBP/USD outlook: Tuesday's bullish engulfing signals reversal but more work at the upside required for confirmation

Slobodan Drvenica Windsor Brokers

GBP/USD

Cable stands at the front foot on Wednesday, following strong rebound after repeated failure to clearly penetrate daily cloud (top of thick cloud lays at 1.2288). The pair advanced 0.83% on Tuesday and formed bullish outside day pattern that marks initial reversal signal. Daily cloud ascends and underpins recovery, along with solid UK manufacturing data, but fresh advance needs to clear 1.2402/13 barriers (10/55DMA's) to sideline existing downside risk, while extension above 1.2466 (Fibo 38.2% of 1.2813/1.2251 / 100DMA) is needed to confirm reversal. Daily studies are improving but momentum is still in the negative territory, with today's close below 10DMA to keep the downside vulnerable. US jobs and manufacturing data, due later today, would provide fresh direction signals.

Res: 1.2413; 1.2466; 1.2517; 1.2532
Sup: 1.2384; 1.2359; 1.2335; 1.2300

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

1. R3 1.2593
2. R2 1.2498
3. R1 1.2449
PP 1.2354
1. S1 1.2305
2. S2 1.221
3. S3 1.2161

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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