GBPUSD surged to a fresh 19-month high during today’s Asian session and hit the strong psychological level of 1.4000. The bullish strength remains intact as the price climbed higher on Monday and successfully surpassed the significant obstacle of 1.3940. The price is developing above its short-term ascending trend line, which has been holding since March 2017.
Short-term momentum indicators are also pointing to a continuation of the bullish bias. However, the RSI is well above the 70-overbought level, suggesting that the latest upswing may be running out of steam and that the risk of a near-term correction is high. On the other hand, the MACD oscillator is moving higher and is strengthening its upside momentum as it stands above its trigger and zero lines.
Further gains should see the 161.8% Fibonacci retracement level at 1.4050 of the last down-leg with the high at 1.3655 and the low at 1.3030. A jump above 1.4050 could drive cable near the next key level of 1.4330 taken from the bottom in May 2016.
In the event of a downside reversal, if the pair slips below the 1.3940 support level, it could open the way for the 1.3655 barrier. Moreover, further losses could lead the way towards the next immediate support of 1.3610.
As a side note, the price posted five straight green weeks and the bullish picture in the medium-term is further supported by the MACD, which is rising and above its red signal line.
