GBP/USD bulls back in play after reaching a 6-week low.
GBP/USD has found strong support at the six-week low of 1.2865 on April 25, shifting the short-term negative bias to bullish. Also, cable penetrated the descending trend line to the upside and it jumped above the 23.6% Fibonacci retracement level of the up leg from 1.2390 to 1.3380 around 1.3150 but it pared some of those gains in the next session.
Currently, the pair is standing above the moving averages, while the RSI indicator is sloping up in the positive area, suggesting more gains. The MACD oscillator is trying to enter the bullish region with weak momentum but it successfully climbed above its red trigger line.
More bullish actions above the 23.6% Fibonacci could drive the pair higher, meeting the 1.3200 handle, taken from the highs on April 3. Should the pair manage to strengthen its positive momentum, the next resistance could come around 1.3270 before resting near the 1.3350 – 1.3380 resistance zone.
However, if prices are unable to break again the 23.6% Fibonacci in the next few daily sessions, the risk would shift back to the downside, below the 20- and 40-simple moving averages (SMAs), challenging the 38.2% Fibonacci of 1.3000. A drop below this handle could open the way for the flat 200-SMA, which stands at 1.2960 ahead of the 50.0% Fibonacci of 1.2885.
Concluding, the recent bias remains bullish in the near term, after the upside break of the falling trend line, while in the medium-term, traders should be waiting for a rally above the nine-month high of 1.3380 for fresh long positions.
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