GBP/USD’s strong rally last week and firm break of 1.3444 resistance is taken as a sign of larger trend reversal. Initial bias remains on the upside this week for medium term 1.3835 support turned resistance next. On the downside, below 1.3522 minor support will turn intraday bias neutral and bring consolidations, before staging another rally.
In the bigger picture, the strong break of 1.3444 key resistance now argues that the long term trend in GBP/USD has reversed. That is a key bottom was formed back in 1.1946 on bullish convergence condition in monthly MACD. Current rise from 1.1946 will target 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466 next. In any case, medium term outlook will now stay bullish as long as 1.2773 support holds.
In the longer term picture, current development argues that whole down trend form 2.1161 (2007 high) is completed at 1.1946 already (2016 low). It’s too early to tell is GBP/USD is staying a long term up trend. But in any case, further rise is in favor to 38.2% retracement of 2.1161 to 1.1946 at 1.5466 next. We’ll monitor the structure of the current rally from 1.1946 to decide if it’s an impulsive move.
