Turning Bullish: The GBP/USD has been bullish in February, after finding support at 1.50 instead of falling to the January low of 1.4950. Price action started to make higher lows and higher highs. In the 4H chart, we can see that it has also cleared some recent resistance levels, as well as the 200-, 100-, and 50-period SMAs.
Confirmations: Also, after the break above 1.52, price retreated from 1.5350, but eventually treated 1.52 and the moving averages as support. Those were price bottom confirmations that suggested further upside.
Wedge Resistance: Last week ended in consolidation, but this week started with another high. However, this rally to start the week was faded before it got to 1.5450. Note that price is hanging out just under the rising wedge resistance.
Wedge support: The retreat was relatively strong, engulfing the previous consolidation price action, and showing some near-term bearish outlook, perhaps towards the rising support of the rising wedge and the 50-period SMA around 1.53. Note that this was also a previous resistance pivot last week.
Bullish Breakout: When we look at the daily chart, we do see some more evidence of a bullish reversal, or at least a potential one. After a bottom, price action has broken above a falling trendline that comes down from the July 2014 high of 1.7190. This break suggests the market is at least turning sideways if not bullish in the medium-term. There seems to be upside risk towards at least the 1.55-1.56 area where the pair will test sellers anchored to the previous consolidation area.
On the other hand, the overall trend is still bearish despite the trendline breakout. The RSI is still under 60, which means the bearish momentum is still in play in the medium-term.
Key Support: Because of the prevailing trend, the 1.53 support will be key in determining whether the current correction will extend towards 1.55/1.56. If 1.53 does not hold, we could have simply been in false breakout, which would translate into a bearish continuation attempt.
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