GBPUSD paused a strong rally that took the pair to a high of 1.3029 on June 30. The near-term bullish phase has not shifted yet despite a pullback from this high as the market remains above the daily Ichimoku cloud. Meanwhile, other technical indicators are positively aligned, adding to the assertion that the short-term bullish bias is still intact.
There is not much scope for a sustained decline since the RSI is still in bullish territory above 50 and the recent downturn in the indicator has stalled, suggesting a weakening in GBPUSD’s downside momentum.
Moreover, the Tenkan-sen line (red) has crossed above the Kijun-sen (blue) -a bullish signal- while the 50-day moving average (MA) made a bullish crossover above the 200-day MA on May 12.
Support is expected by the top of the Ichimoku cloud at 1.2907. Should the price contract below this level, the 50-day MA at 1.2872 is likely to provide additional support.
To the upside, a rebound in GBPUSD from current levels could see a retest of the May 18 high of 1.3046 with scope to target the September 2016 high of 1.3120.
Looking at the bigger picture, the market maintains a bullish to neutral structure following a rise from the March 14 low of 1.2108. Since rising above the 200-day MA, the pair has been neutral between 1.2580 and 1.3050.
