- GBP bulls taking over and seeking out a break from key support.
- Blue skies are on the horizon, but there is plenty of leg work to do yet.
The pound has been one of the best-performing G10 currencies of late. Investors have been encouraged by an improvement in the coronavirus statistics for the UK as well as the easing of the lockdown.
In yesterday’s note, GBP/USD is a loaded pair of fundamentals, technically ripe for the bears, the June 24th highs were targetted for which the price met and exceeded with a bullish pin bar.
While the fundamentals have not changed from a longer-term perspective, which could be troublesome for the following bullish technical outlook, there is still some topside analysis worth exploring this juncture.
Let’s start at the top and work our way in.
Firstly, we can see that the longer-term charts have the pair trapped between monthly support and weekly resistance.
Then, we can see that the price made it back to yesterday’s said target and has held at the structure.
Blue skies on the horizon
On a wave count of impulse and corrections, we would expect to see the resistance structure, on a daily basis, be tested again.
A failure there would open prospects of the 4th wave, (correction), being supported for a higher low at current resistance before wave 5, (impulse), has a chance to test back at the resistance and break higher for blue skies.
The only thing that is required for this scenario to unfold is nearer-term price action holding above the support structure that it has just penetrated in recent trade (early Asia).
At this juncture, a retest of the structure would be a compelling entry point if the price doesn’t just continue higher.
However, we need to see momentum in the bullish territory from a 4HR perspective for additional confirmation as well as price moving through the 21 moving average.