GBP/USD Weekly Outlook

Outlook in cable remains unchanged as the pair continued to engage in choppy sideway trading between 1.9599 and 2.0029 last week, without making any progress. The possibility of current choppy consolidation from 2.0029 to extend further cannot be ruled out and price actions could continue to be volatile. Nevertheless, the falling wedge formation from 2.0391 to 1.9599 is still the most important factor in the near term outlook as it has short term bullish implication. And with 1.9599 support intact, price actions from 2.0029 is still treated as consolidation to rise from 1.9599 only. On the upside, a break above 1.9965/2.0029 resistance zone will confirm the short term bullish outlook. This will also indicate that rebound from 1.9337 is resuming for retest of 2.0391 resistance. Meanwhile, on the downside, below 1.9599 support is needed to indicate fall from 2.0391 has resumed towards 1.9337 low.

In the bigger picture, down trend from 2.1161 have made a low at 1.9337. Recent price actions suggest that rebound from 1.9337 is still in progress and is set to have another rise to 2.0391 and above. However, strong resistance should be seen at 61.8% retracement of 2.1161 to 1.9337 at 2.0464 and bring completion of the corrective rebound. On the downside, break of 1.9599 will revive the case that rise from 1.9337 has completed with three waves up to 2.0391 and will encourage retest this low.

In the longer term picture, prior break of medium term rising channel at least indicate that rise from 1.8090 has already completed at 2.1161, so is the medium term up trend from 1.7047 probably. Hence, sustained break of 2.1161 is needed to confirm the whole up trend has resumed. Otherwise, another fall is still expected towards 61.8% retracement of 1.7047 to 2.1161 at 1.8619 after finishing the current rebound from 1.9337. Also, while cable is still staying above 55 months EMA (now at 1.8727) as well as the long term trend line support (now at 1.8929) there is no indication of the completion of up trend from 1.3680 (01 low) yet. However, bearish divergence in monthly MACD and RSI suggests 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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