GBP/USD: En-route to test its descending trendline circa 1.32

Cycles & Levels: As reiterated, the weekly is in the process of re-testing the top-side of its range at 1.3280. On the daily, the acceptance above 1.3085/1.31 turns the focus towards the descending trendline marked in the chart circa 1.32. Even if the daily is still in a down-cycle, the impulsiveness of the recovery should be worrying if you are a seller. That said, we are starting to get some tentative evidence off the hourly that a potential downward correction might be in store back to re-test 1.30-3050 area. Considering that the price has made it to the 100% fib projtarget and that this second cycle is far less impressive in magnitude and speed that the first one, the breakout of the trendline seen is the first clue needed for this scenario to come true.

Correlations & Volumes: The 5-year UK vs US yield spread screams sell-side opportunity at key macro levels (1.32 and above). Don’t forget that very short-term, the move up has been a sentiment play boosted by a Brexit deal optimism, and further assisted by USD weakness across the board. Notice how the volume has been on the rise in the last 3 days,which communicates the market keeps its commitment firm towards higher levels. Wednesday’s POC stands at 1.3140, so that’s the key level to re-take to gain further clarity in the resumption of the uptrend towards mentioned upside targets.