The GBP/USD has been bullish in February after building a price bottom in January. In the short-term, the market has been going through stages of bull runs and sideways consolidations. Last week was the same, as price started to stall between roughly 1.5480 and 1.5330.
This week, traders pushed cable above 1.55, clearing last weeks consolidation range and continuing this month’s uptrend. The 1H chart shows that after the bullish breakout, there was a pullback from 1.5538. So, far the market is showing respect to the previous consolidation range as support. Even if price falls to 1.5425, the bullish outlook should still be in play. However, below 1.54, this week’s bullish breakout might be invalidated.
This could also be a harbinger for a period of consolidation or even bearish reversal against February’s move, first putting the 1.5330 under pressure. A break below 1.53 might revive a prevailing downtrend, but the next range support will be around 1.52. A hold above 1.52 can still keep February’s bullish correction mode going, especially if the 4H RSI holds above 40, which shows maintenance of the prevailing bullish momentum.
A break below 1.52 however, would be a strong sign of bearish continuation and would at least open up the 1.4950 low on the year, with risk of falling towards the 1.49 handle.
Let’s say the bullish correction in February stays. What’s the next resistance?
In the daily chart ,we can see that there is a support/resistance pivot at 1.56 that might provide immediate resistance above the current high at 1.5538. Above 1.56, there is another key support/resistance pivot area around 1.5785. For no, let’s limit our bullish outlook to this level due to the prevailing downtrend in the second half of 2014.
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