Like EUR/USD, similar developments could be seen in GBP/USD, where the pair strengthened and moved north last week. The only red day was Friday, but the losses were not significant. GBP/USD found its resistance at around the 1.3475 area, from which the rate pulled back down, but still managing to close the week in the positive zone.
OUTLOOK (SCENARIO A / B)
Looking at the short-term picture, we see the likelihood for the pair to continue recovering and perhaps make another move towards the 1.3475 level, a break of which could open the way for the next key area of resistance at 1.3620. If that area is not able to withhold the rate, then a test of the 1.3710 mark could be possible.
The RSI rebounded from near 20, but flattened slightly below 50, while the MACD, although negative, lies above its trigger line. The MACD corroborates the case for some more upside, but the flattening RSI make us cautious that another minor setback may be on the cards before the bulls decide to take charge again.
On the other hand, if GBP/USD moves below Friday’s lows at around 1.3355, then this could interest the bears in driving the pair back down towards 1.3300. The break of that level could take GBP/USD towards May’s lows at around the 1.3200 area. A break below that is possible to open the door towards the next key area of support at the 1.3030 level.
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- Technical Analysis