GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.6267; (P) 1.6322; (R1) 1.6395; More

GBP/USD soars to as high as 1.6456 today but drops sharply since then. As noted before, rise from 1.5829 is treated as correction to fall from 1.6875 only and is expected to be limited by 61.8% retracement of 1.6875 to 1.5829 at 1.6475. Considering mild bearish divergence condition in 4 hours MACD and RSI, intraday bias is turned neutral for the moment. Break of 1.6209 support will suggest that such correction has completed and will flip intraday bias back to the downside for 1.5829/5896 support zone. Break there will confirm that whole fall from 1.6875 has resumed for 1.5706 key cluster support.

In the bigger picture, we're still favoring the bearish case that medium term rebound from 1.3503, which is treated as a correction to down trend from 2.1161, has completed at 1.7043. Firm break of 1.5706 cluster support (38.2% retracement of 1.3503 to 1.7043 at 1.5691) will confirm this case and indicate that whole down trend from 2.1161 is likely resuming for a new low below 1.3503.

However, note that sustain break of 61.8% retracement of 1.6875 to 1.5829 at 1.6475 will in turn indicate that whole fall from 1.6875 has completed and recent price actions from 1.7043 are merely consolidations to the larger rise from 1.3503 only. That is, whole medium term rise from 1.3503 might not be finished yet and another rise could still be seen to 1.7332/8236 (50% and 61.8% retracement of 2.1161 to 1.3503) before completion.

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