GBP/USD Daily Outlook

Daily Pivots: (S1) 1.7504; (P) 1.7604; (R1) 1.7706; More

With 4 hours MACD back above signal line, an intraday low is probably in place in cable and some more consolidation could be seen. Nevertheless, short term outlook remains bearish for the moment and deeper decline is still expected to next target of 161.8% projection of 2.1161 to 1.9337 from 2.0158 at 1.7207. However, above 1.7974 will argue that a short term bottom is finally formed, possibly on bullish convergence condition in 4 hours MACD and stronger rebound should be seen to test 1.8512 resistance.

In the bigger picture, medium term fall from 2.1161 (07 high) is still in progress and should be targeting next key support at 1.7047 first. On the upside, break of 1.8512 resistance will indicate that a short term bottom is finally formed and bring stronger rebound and longer consolidation. But upside should be limited well below 1.9337 support turned resistance and bring another fall.

In the longer term picture, last week's development further confirms that a long term reversal has happened at 2.1161 with monthly MACD turning negative and RSI diving into oversold region. The impulsive nature and the scale of the fall from 2.1161 also provides strong evidence to the case of the start of a long term down trend. Next downside target will be 61.8% retracement of 1.3680 to 2.1161 at 1.6538. Break of 2.0158 resistance is needed to invalidate this view.

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