GBP/USD: Will this rally begin a phase of Cable strength or a move that will flounder again? [Video]

GBP/USD

An impressive rally on Cable has threatened to change the outlook. A strong positive candlestick has broken a three week downtrend and seen the market close above resistance at $1.2295. Momentum indicators are swinging higher with near term positive signals. The question is whether this is a rally that begins a phase of sterling strength versus the dollar, of whether it is a move that will flounder again. We note the bull candles of last week were followed by a renewed corrective slip but this formed a higher low at $1.2160 again. Holding above this support (and forming another higher low will now be key for Cable as the market just begins to slip back again this morning. Ideally the bulls will be looking to hold on to breakout support at $1.2295. The RSI is now into the 50s again and for this near term bull move to be sustainable, this needs to become a consistent feature. The more optimistic bulls will be eyeing the lower high resistance at $1.2465. The hourly chart shows a support band now $1.2245/$1.2295 as a near term area for the next higher low, to maintain the improving outlook.