GBP/USD Technical Outlook Remains Constructive
GBP/USD Technical Outlook
- GBP/USD trying to separate away from long-term resistance
- Short-term charts remains constructive with price trend in place
- Keep an eye on the channel structure for further guidance
GBP/USD positioned to trade higher
GBP/USD closed last month (and for the year) above a long-term threshold dating to the 2009 low. The area around 13500 had become a significant level of resistance twice since then, in 2019 and 2020. The rise above horizontal resistance has also been accompanied by the breaking of the 2007 downtrend line. A powerful long-term combination that could keep cable trading higher for a while.
In the intermediate-term, GBP/USD continues to trend higher within the confines of an upward channel. The general trading bias remains neutral at worst as long as the lower parallel is held. To pick up momentum price will need to eventually trade above the upper parallel, an event that could unfold soon. If this happens, then the next major targeted area of resistance clocks in around the 2018 highs in the 14300s.
Looking at the 4-hr chart, a bull-flag is forming that could soon send cable higher. A breakout from this pattern could push GBP/USD above the upper parallel of the channel and give it further separation from long-term resistance around the 13500-mark.
To undermine this bullish outlook, a breakdown below the lower parallel of the September to current channel will need to develop. In this scenario, look for price to potentially accelerate lower as the minor breach above long-term resistance proves to be a head fake.
GBP/USD Monthly Chart (above resistance)
GBP/USD Daily Chart (channeling)
GBP/USD 4-hr Chart (bull-flag)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.