GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.6112; (P) 1.6245; (R1) 1.6467; More

GBP/USD's break of 1.6189 minor support suggests that recovery from 1.5983 has possibly completed at 1.6378 already. Intraday bias is flipped back to the downside and break of 1.5983 will confirm that fall from 1.6742 has resumed for medium term rising trend line (now at 1.5761). 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. On the upside, above 1.6378 will bring another rise to complete the correction from 1.5983. But upside should be limited below 1.6742 high.

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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