GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.5990; (P) 1.6063; (R1) 1.6145; More

With an intraday low in place at 1.5983, recovery from there extends further today. Some more consolidation could be seen but after all, we'd still expect upside to be limited by 1.6293 minor resistance and bring fall resumption. Below 1.6080 minor support will suggest that fall from 1.6742 is resuming for medium term rising trend line (now at 1.5737). As mentioned before, recent development is inline with the view that GBP/USD should have made an important top at 1.6742 with bearish divergence conditions in 4 hours MACD and RSI. Sustained break of the trend line support will add much credence to this bearish case. Meanwhile, break of 1.6293 will argue that stronger rebound is underway.

In the bigger picture, rise from 1.3654 is treated as the third leg of the correction that started at 1.3503, which correct the larger down trend from 2.1161. Such rally from 1.3654 should be in the last stage after meeting target zone of 1.6428/7332 (38.2% and 50% retracement of 2.1161 to 1.3503). Indeed, considering last week's sharp reversal, and with daily MACD broken its up trend, such rise might have completed at 1.6742 already. Break of 1.5801 support will now be an important signal that the whole correction has finally completed and will turn focus to next key support of 1.4984 for confirmation. Meanwhile, while another rise cannot be ruled out, focus will remain on reversal signal as we'd expect the whole correction from 1.3503 to conclude inside this 1.6428/7332 area.

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