GBP/USD Breaks Above Double Bottom Towards 1.6100, 1.6170

Short Term and Medium Term

The GBP/USD has rallied above a double bottom formation, suggesting a reversal from the decline from the 1.64 area.

This could be just a correction to the decline. If we are in a zig zag, the rally should see resistance at 1.61 as wave (c) would then be 161.8% projection of wave (a). Above that, it is difficult to assume this to be a correction.

Above 1.61, we do have another resistance at 1.6170, 50% retracement.

The RSI shows bullish momentum, but to confirm, we need to see a failure to break below 40, then back up above 70.

The bearish outlook opens up, if the current rally goes no further and a decline breaks below 1.6020 pivot that was suppose to be wave (i) of (3).

The bearish target is the 1.5750-1.58 zone.

The upside is limited to 1.6170 as mentioned, but if we break above 1.6230 we can look for a rally towards 1.64 and possibly beyond.

At the moment, we should anticipate the short-term bullish outlook, with caution to a possible medium term decline to follow.