Like most currencies, the British pound has struggled against the US dollar so far this year, with GBP/USD falling by nearly 2000 pips from its mid-January high to its mid-July low. Over the past couple of weeks however, bulls have managed to drive the pair 500 pips off its low to peek above the 50-day MA for the first time since February.
The current bullish channel has lasted longer than a similar structure that formed in May, and the RSI indicator has reached its highest level since January, suggesting that cable is seeing more buying pressure than it has at any point in the last six months.
For buyers to have more confidence that a durable bottom has formed, they’ll need to see rates hold above the 50-day MA. To the topside, the next resistance levels to watch will be near 1.2520 (the 38.2% Fibonacci retracement of this year’s drop), 1.2650 (previous resistance in April and May) and 1.2750 (the 50% Fibonacci retracement). Meanwhile, a break below the near-term bearish channel would point to a likely drop to 1.2000 or lower in short order.
The current bullish channel has lasted longer than a similar structure that formed in May, and the RSI indicator has reached its highest level since January, suggesting that cable is seeing more buying pressure than it has at any point in the last six months.
For buyers to have more confidence that a durable bottom has formed, they’ll need to see rates hold above the 50-day MA. To the topside, the next resistance levels to watch will be near 1.2520 (the 38.2% Fibonacci retracement of this year’s drop), 1.2650 (previous resistance in April and May) and 1.2750 (the 50% Fibonacci retracement). Meanwhile, a break below the near-term bearish channel would point to a likely drop to 1.2000 or lower in short order.