GBP/USD started the year continuing its prevailing downtrend, but found support in the 1.5035-1.5055 area as we can see in the 4H chart, back during the Jan7-8 sessions. Since then, price has corrected to 1.5270 before retreating again.
Double Bottom Attempt: The 4H RSI held below 60, which reflects maintenance of the prevailing bearish momentum in this time-frame. The technical picture looked bearish, and poised for continuation after price returned below the 50-period SMA. However, price was NOT able to break below the 1.5035-1.5055 support area and instead rallied back above the 50-period SMA and above the middle of the consolidation range. This rally will be challenged at 1.52. A bearish continuation scenario is still alive if price holds below 1.52. Otherwise, the pressure will be towards the 1.5270 resistance, with risk of breaking higher, in which case we would have a completed double bottom.
Breakout Projection: Now, if GBP/USD does complete the double bottom, there is upside risk towards the 1.5450-1.55 area. This area contains the 200-period SMA, a previous support area, as well as a breakout projection. The double bottom has a range of about 230 pips. 230-pips above 1.5270 projects the breakout to 1.55.
More Resistance Factors: The daily chart shows that just above 1.55, there is the 50-day SMA, another possible factor for resistance. Now just below 1.55, closer to 1.5450, there is a falling trendline coming down from the 1.7191 July 2014 high, making the 1.5450-1.55 area a key resistance for the bearish outlook to continue.
UK Jobs Data: Whether cable will complete a double bottom might depend on tomorrow’s Jobs data. The Claimant Count Change is expected to be -24.2K for December after a -26.9K reading in November. Average Earnings in the 3 months to November is expected to have been 1.7% higher than the same 3 months a year ago. This would be better than the 1.4% for October. We are also expect BoE’s meeting minutes to be released tomorrow. After these event risks ,lee’s see if 1.5270 is still resistance. If it is, cable remains bearish. But if does not, GBP/USD is turning sideways into a period of consolidation, with upside at least to the 1.5450-1.55 resistance area.
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