GBP/USD battles with 1.40, bullish bias is expected [Video]

Melina Deltas, CFTe XM

GBPUSD is battling with the strong 1.4000 psychological level, following the rebound off the long-term ascending trend line and the 1.3670 support. Moreover, cable jumped above the 20- and 40-day simple moving averages (SMAs) and the Ichimoku cloud.

Looking at the technical indicators, the RSI is approaching the 70 level with weaker momentum than the previous session, while the stochastic is turning marginally lower in the overbought region.

Stronger upside movements could meet the prior high of 1.4235, which is a 35-month peak. Above this, the 1.4345 barrier could be a crucial level for the bulls, taken from the top on January 2018.

Otherwise, a descending move below the SMAs and the cloud could hit the rising trend line near 1.3740 before slipping to the 1.3670 level. More negative pressures could bring the neutral sentiment into play, finding support at the 23.6% Fibonacci retracement level of the upward move from 1.1405 to 1.4235 at 1.3570 and 1.3435. Slightly below this line, the 200-day SMA at 1.3380 may pause the downside move.

In conclusion, GBPUSD is trying to overcome 1.4000, taking the price into a more bullish phase in the bigger view. However, a decrease below the uptrend line may shift the market to neutral.

Author

Melina Deltas, CFTe

Melina joined XM in December 2017 as an Investment Analyst in the Research department. She can clearly communicate market action, particularly technical and chart pattern setups.

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