- GBP/USD gains some strong positive traction on Tuesday and recovers further from two-week lows.
- The set-up might have already shifted in favour of bulls and supports prospects for additional gains.
The GBP/USD pair rallied to three-day tops during the first half of the European trading session, with bulls now eyeing some follow-through buying beyond the key 1.3000 psychological mark.
The momentum pushed the pair beyond a resistance marked by the top boundary of a near two-week-old descending channel. A subsequent move beyond the 38.2% Fibonacci level of the 1.3482-1.2676 downfall might have already set the stage for additional gains.
The constructive set-up is further reinforced by bullish oscillators on intraday charts. However, RSI on the 1-hourly chart has already moved above the 70.00 mark, while neutral technical indicators on the daily chart are yet to confirm the bullish outlook.
Adding to this, the uncertainty about the actual outcome of the US presidential election also warrants some caution for bullish traders. Hence, it will be prudent to wait for some follow-through buying before positioning for any further appreciating move.
That said, a sustained move beyond the 1.3000 mark has the potential to lift the GBP/USD pair towards the 50% Fibo. level resistance, around the 1.3075-80 region. This is closely followed by the 1.3100 mark, which if conquered will negate any near-term bearish bias.
On the flip side, the descending trend-channel resistance breakpoint, around the 1.2965-60 region, now seems to protect the immediate downside ahead of the 1.2940 horizontal level. Failure to defend the mentioned support levels will be seen as a fresh trigger for bearish traders.
The GBP/USD pair might then accelerate the fall back towards the overnight swing lows, around the 1.2855 static support. A convincing break below should now pave the way for an extension of the recent sharp pullback from the 1.3175 region touched on October 21.
GBP/USD 4-hourly chart
Technical levels to watch
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