GBP/USD Aims for a Bullish Breakout
2022.11.08 08:13
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GBP/USD returned to test February’s crucial descending trendline near 1.1535 after two strong consecutive bullish days.
The positive intersection between the 20- and 50-day simple moving averages (SMAs), if sustained, could increase hopes for a bullish trend reversal. In other encouraging signs, the RSI keeps hovering above its 50 neutral mark and the stochastics have changed course to the upside. Yet, the MACD has yet to climb above its red signal line, suggesting that further improvement is needed to confirm a bullish bias.
Hence, traders may eagerly wait for a decisive close above the trendline before they target the short-term resistance line near September’s high of 1.1737. Not far above, the 38.2% Fibonacci retracement of the 1.4248-1.0324 downleg could block the way towards the 1.2045-1.2145 constraining zone. Even higher, the spotlight will fall on the 50% Fibonacci of 1.2285, where the 200-day SMA happens to be.
Should the bulls lose control, the price may seek shelter within the 1.1250-1.1200 area formed by two ascending trendlines. Failure to bounce here and a clear extension below 1.1150 could fortify selling pressures towards the 1.0922 low. Beneath the latter, the price could tumble to meet the lower boundary of the broad bearish channel near 1.0660.
In brief, although the technical picture favors the bulls, GBPUSD will need a sustainable rise above 1.1535 to bring new buyers into the market.
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