GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.7674; (P) 1.7757; (R1) 1.7848; More

With an intraday low in place, intraday outlook in cable remains neutral for the moment and some more recovery cannot be ruled out. Though, consolidation should be relatively brief as long as 1.8086 minor resistance holds and break of 1.7667 will indicate recent decline has resumed for next target of 161.8% projection of 2.1161 to 1.9337 from 2.0158 at 1.7207. However, with mild bullish convergence condition in 4 hours MACD as background, break of 1.8086 will indicate that a short term bottom is finally in place and will encourage stronger rebound towards 1.8794 resistance before staging another fall.

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. The developments so far are arguing that whole multi year up trend from 1.3680 (01 low) has also completed too. Those developments include strong break of the long term trend line and 55 months EMA, bearish divergence conditions and trend breaking in monthly MACD and RSI. The impulsive nature of the decline from 2.1161 and break of 1.8303/60 (100% projection of 2.1161 to 1.9337 from 2.0158 at 1.8360 and 38.2% retracement of 1.3680 to 2.1161 at 1.8303) added more credence to this case. The downside target is now 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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