GBP/USD - Bearish Confirmation or Bullish Breakout?
The pound has reached an interesting level against the dollar, one that could determine whether the pair is back in bullish territory or the end of a correction.
The pair found strong support around the 200/233-day SMA band a couple of weeks ago and has rebounded strongly since. This came after it broke below the 55/89-day SMA band in mid-June, which had been a reliable level of support over the last year.
The pair now finds itself running at the 55/89 band from below, which will be an interesting test of the strength of the breakout. A rebound off this level would act as confirmation of the breakout.
With the 55/89 band also falling around the 50 and 61.8 fib levels - June high to July low - it really is a big level for the pair. A move back above may be seen to be overriding the initial breakout while a failure could be a very bearish signal.
The key level below then arguably becomes 1.38, which coincides with past support on the daily chart but also some key levels on the 4-hour chart.
The pair only recently broke above the 55/89 and 200/233 SMA bands on the 4-hour chart which could give it momentum to run at 1.40 and break through major resistance.
A move below 1.38 takes the pair back below both moving average bands on the 4-hour chart, which could act as further bearish confirmation.
The pair found strong support around the 200/233-day SMA band a couple of weeks ago and has rebounded strongly since. This came after it broke below the 55/89-day SMA band in mid-June, which had been a reliable level of support over the last year.
The pair now finds itself running at the 55/89 band from below, which will be an interesting test of the strength of the breakout. A rebound off this level would act as confirmation of the breakout.
With the 55/89 band also falling around the 50 and 61.8 fib levels - June high to July low - it really is a big level for the pair. A move back above may be seen to be overriding the initial breakout while a failure could be a very bearish signal.
The key level below then arguably becomes 1.38, which coincides with past support on the daily chart but also some key levels on the 4-hour chart.
The pair only recently broke above the 55/89 and 200/233 SMA bands on the 4-hour chart which could give it momentum to run at 1.40 and break through major resistance.
A move below 1.38 takes the pair back below both moving average bands on the 4-hour chart, which could act as further bearish confirmation.
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