GBP/USD Being Resilient
The Pound has been more resilient against the Greenback than other major currencies have been, such as the Euro, the Aussie, and Japanese Yen. After an early September low of 1.6061, GBP/USD has been consolidating, coming up to 1.65 before retreating again.
(click to enlarge)
When we look at the 4H chart, we can see that for the most part the market is still bearish. Price held below the 200-period simple moving average (SMA), and now price is back below the 100-, and 50-period SMAs as well.
Some Bullish Signs and a Falling Wedge:
However, we also see that the 4H RSI tagged 80, which showed strong bullish momentum. While the pair is not maintaining this bullish momentum well, with the 4H RSI breaking below 40, GBP/USD has not revived the bearish momentum, which would be the case if the 4H RSI dipped below 30.
Furthermore, price seems to be finding support around 1.6162, a support pivot on 9/15. What will turn GBP/USD bullish?
A break above 1.6250 should be an early signal that GBP/USD is shifting from bearish mode to at least a sideways mode if not a bullish one. Above 1.6250, cable would break above a falling wedge pattern, which would signal a bullish outlook in the short-term. Then if it breaks above 1.63, and the 4H RSI pushes back above 60, the market should have the high around 1.65 in sight.
Let’s take a look at the weekly chart to get some perspective:
Bullish Bias since 2013:
When we look at the weekly chart, we can see that the market since mid-2013 can still be considered bullish, although the momentum was lost as the weekly RSI dipped below 40. Still, price is holding above the 200-, and 100-week SMAs. Also, price is still above the 50% retracement level, which is at about 1.60.
We should also consider the shift from strong bearish weekly candles to tentative ones to be a sign that GBP/USD already shifted from bearish to neutral in the medium-term, so in the long-term, it is neutral-bullish.
Since cable is already shifting away from its bearish mode, if we see the USD give back its gains, GBP/USD might shift back into the bullish mode.
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