GBP/USD Daily Outlook

Daily Pivots: (S1) 1.5884; (P) 1.6194; (R1) 1.6384; More

GBP/USD's retreat from 1.6671 was contained above mentioned 1.5938 resistance and recovers. Outlook remains neutral for the moment. On the downside, below 1.5938 will indicate that rise from 1.5269 has completed and bring retest of this low. Nevertheless, note that a short term bottom is formed in 1.5269 and the consolidation from there could still extend further as long as this support holds. On the upside, while another rise could be seen, upside is expected to be limited below 1.6786 resistance. In any case, break of either side of 1.5269 and 1.6786 is needed to confirm consolidation has completed.

In the bigger picture, while rebound from 1.5269 is strong, there is no confirmation of a medium term bottom yet. There are some different interpretations of the structure of the whole down trend from 2.1161, with different projection targets. The most bearish case is that fall from 2.0158 is the third wave in whole fall from 2.1161 while fall from 1.8668 is the third wave of the fall from 2.0158. In other words, GBP/USD is just in the middle of the whole down trend from 2.1161. The least bearish case is that the fall from 1.8668 is the fifth wave of the whole five wave decline from 2.1161 and is nearing an end. Nevertheless, in any case, the fall from 1.8668 needs to complete a five wave structure before considering that a medium term bottom is formed. Having said that, medium term outlook will remain bearish as long as 1.6786 support turned resistance holds and a new low should be made before making a medium term bottom. However, above 1.6786 will indicate that fall from 1.8668 has possibly completed. It will also be the first alert that a medium term bottom is in place and break of 1.7630 will confirm. In such case, some large scale consolidations will follow.

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