GBP/USD, BRITISH POUND – Technical Outlook:
- GBP/USD has damaged above very important resistance.
- The resistance break factors to additional rise.
- What is the outlook and the signposts to look at?
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GBP/USD SHORT-TERM TECHNICAL FORECAST – BULLISH
The British Pound’s break above key resistance this week towards the US Dollar not solely factors to additional positive factors within the coming days and weeks, but additionally strengthens the base-building case outlined a few weeks ago.
GBP/USD has risen above key converged resistance: the early-October excessive of 1.1495 and a minor downward-sloping trendline from early October. The breakout from the trendline which is the highest of a minor triangle confirms that the latest vary was a consolidation inside a broader restoration construction (see chart). Moreover, this confirms Scenario 1 outlined last week – the shallow retreat center of the month from the early-October excessive – paints a comparatively bullish view.
GBP/USD Daily Chart
Chart Created Using TradingView
GBP/USD seems to be set to check the mid-September excessive of 1.1740, roughly coinciding with the 89-day transferring common. This resistance is essential: the final time the pair was above the common was in 2021, so a decisive break above it will be vital. Such a break might open means in direction of the 200-day transferring common (now at about 1.2375).
If the pair manages to shut this week round Thursday’s Asia morning excessive, then it will be the primary time since finish 2021 that it will likely be decisively above the 10-week transferring common. Back then the rise above this barrier was adopted by two extra weeks of positive factors (see chart). Overall, the developments on the charts this week strengthen the case that GBP/USD has made an interim low on the September low of 1.0385, particularly contemplating positioning, sentiment, and valuations.
GBP/USD Weekly Chart
Chart Created Using TradingView
On the draw back, there may be instant cushion on the resistance-turned-support on the early-October excessive of 1.1495 adopted by the final week’s low of 1.1060. Stronger help is on the mid-October excessive of 1.0925.
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— Written by Manish Jaradi, Strategist for DailyFX.com