GBP/USD Weekly Outlook

Cable's rebound from 1.9386 extended further to 1.9737 last week but retreated since then. From a short term angle, outlook in neutral initially this week. But with 1.9550 support remains intact, further rally is still mildly in favor. As discussed before, break of 1.9788 resistance will indicate that correction from 1.9337 is still in progress towards resistance zone of 38.2% retracement of 2.1161 to 1.9337 at 2.0034 and 100% projection of 1.9337 to 1.9957 from 1.9386 at 2.0006 before completion. On the downside, though, break of 1.9550 support will indicate that rise from 1.9386 is merely a correction to fall from 1.9957 and has completed. In such case, intraday bias will be flipped back to the downside and will bring retest of 1.9386 low first.

In the bigger picture, as discussed before, prior break of medium term rising channel and 2.0 psychological level at least indicate that rise from 1.8090 has already completed at 2.1161. With 55 weeks EMA taken out too, it's likely that the medium term up trend from 1.7047 has also completed. Deeper medium term decline is expected towards 61.8% retracement of 1.7047 to 2.1161 at 1.8619. The above view remains valid as long as upside of the consolidation from 1.9337 is limited by 2.0099 resistance. However, with a short term low in place at 1.9337, further consolidation could still be seen and break of 1.9337 is needed to confirm whole down trend from 2.1161 has resumed.

In the longer term picture, with cable still staying above 55 months EMA as well as the long term trend line support, there is no indication of the completion of up trend from 1.3680 (01 low) yet. However, bearish divergence in monthly MACD and RSI suggest that 2.1161 is at least a medium term top and more downside is in favor in medium term even if the long term up trend will resume eventually.

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