GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.6831; (P) 1.7005; (R1) 1.7221; More

GBP/USD's break of 1.7398 resistance indicates that a short term bottom is in place. Intraday bias is now on the upside as long as 1.7108 minor support holds. Further rise could now be seen to test next resistance of 1.7843. On the downside, below 1.7108 will firstly flip intraday bias back to the downside for retesting 1.6786 low. Secondly it will argue that decline from 1.8668 is still in progress for 61.8% retracement of 1.3680 to 2.1161 at 1.6538.

In the bigger picture, a long term top is in place at 2.1161 and down trend from there is still in progress. Next medium term target is 61.8% retracement of 1.3680 to 2.1161 at 1.6538. 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. Sustained break of 1.6538 will target 1.3680 (01 low).

On the upside, however, above 1.7398 resistance will also be the first signal that fall from 1.8668 has completed. Further break of 1.7843 will add more credence to this case. Also, this will argue that the five wave decline from 2.1161 has completed too. In such case, medium term outlook in GBP/USD will be turned neutral and expect some consolidation between 1.6786 and 1.8668 before resuming the long term down trend. Nevertheless, upside of the consolidation should be limited by 1.8668 resistance.

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