- EUR/USD could be in line for a significant breakout which would be expected to drag GBP along for the ride.
- GBP/USD needs to clear 1.3690 for bluer skies.
As per the prior analysis, GBP/USD Price Analysis: Bears press 1.3700 critical daily support, the price of cable is firming at the projected support area and there is now a focus on the upside.
GBP/USD prior analysis
As illustrated last Thursday, GBP/USD's hourly chart was pressuring support below a double top which added conviction to the downside prospects. The targeted area was shown to be between 1.3620 and the 1.3640s.
Meanwhile, the bears are pulling out around this structure as per the following 4-hour chart's illustration:
GBP/USD 4-hour chart
The price could be expected to now move higher to test what could prove to be a tricky layer of resistance. If the bulls do commit, then a break of the 4-hour highs would be required before prospects of a bullish continuation might unfold on the daily chart as follows:
GBP/USD daily chart
As drawn, the price has already made a 50% mean reversion of the prior bullish impulse. However, bulls need to break 1.3690 and in doing so, they would be on course for a continuation to the upside. However, given that there is still room to go until the counter trendline is tested, there is the risk that the price continues to fall in the coming sessions in order to mitigate the inefficiency of the price between 1.3604 and 1.3637:
On the other hand, if the US dollar continues to bleed out, the pound may well follow in the euro's footsteps and keep up with the bid:
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