GBP/USD outlook: Tuesday's bullish engulfing signals reversal but more work at the upside required for confirmation
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. Read More...
GBP/USD analysis: Trades near upper channel line
Yesterday, the GBP/USD exchange rate jumped to the resistance formed by the weekly PP and the 200-hour SMA near 1.2400. During Wednesday morning, the rate was testing the given resistance.
From a theoretical perspective, it is likely that the currency pair could reverse south from the upper line of the medium-term descending channel circa 1.2400. Read More...
GBP/USD: Underperformance expected to continue
Over the past couple of weeks, sterling has been the worst performing major currency by some way. Although there was a degree of kick back against this yesterday, we expect this underperformance to continue. Subsequently, today is an important session for the continuation of the near term corrective outlook on Cable. A strong positive candle posted yesterday was counter to a three week downtrend and gives another chance to sell. This trendline sits at $1.2405 today as the early move has dropped back again. However, if the bulls can rally again and post another positive candle, then it would break the three week downtrend and suggest the market is ready to pull higher once more. Momentum indicators are at an intriguing crossroads too, where they remain negatively configured on a near term basis, but With Stochastics ticking higher, this could also be a turning point for a rally. The hourly chart shows the importance of how the market responds around $1.2400 resistance (an old basis of support which capped yesterday’s recovery) will be for the near term outlook. Read More...
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