GBP/USD quickly erases earlier gains; bullish in the short term.
GBP/USD posted a sharp bullish rally earlier today almost challenging the 1.3300 level, however, the price quickly erased those gains and returned back around 1.3200. In the previous day, cable added 230 pips gains, driving the price above the 23.6% Fibonacci retracement level of the up leg from 1.2390 to 1.3350, around 1.3120.
Technically, the RSI continues to flatten around the neutral threshold of 50, while the MACD is gaining some steam approaching the trigger line, both signaling that a bullish to neutral move is likely to persist in the short term. Yet the upward-sloping 20- and 40-day simple moving averages (SMA) suggest that the recent uptrend is not near to its end.
The 1.3300 – 1.3350 area could provide immediate resistance in case bullish action stretches further above today’s high. If the market manages to rally above this point and more importantly clear the peak at 1.3350, resistance could be next found near 1.3475, registered on June 2018. Another successful upside break could bring 1.3600 into view, identified by the highs on May 2018.
Otherwise, the pair could slip below the 23.6% Fibonacci to challenge the 20- and then the 40-SMA currently around 1.3095 and 1.3045 respectively, ahead of the 38.2% Fibonacci of 1.2980. Under these lines, immediate support is coming from the 1.2960 level, taken from the latest lows, while if this fails to hold too, traders could then look for support at the 50.0% Fibonacci of 1.2870.
Concluding, GBP/USD has been trading in an upside tendency over the last two-and-a-half months, following the bounce off the 21-month low, while looking at the long-term picture, the price seems to be neutral, creating a trading range within 1.2475 – 1.3300.
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