Daily Pivots: (S1) 1.3741; (P) 1.3841; (R1) 1.3927; More…..
GBP/USD spikes higher to 1.3942 but fails to sustain above 1.3835 key resistance yet. Intraday bias remains neutral first. We’d still expect strong resistance from 1.3835 to limit upside to complete the medium term rally from 1.1946. Break of 1.3612 resistance turned support will be the first sign of reversal and turn bias back to the downside for 1.3457 support. However, sustained break of 1.3835 will carry larger bullish implication and target long term fibonacci level at 1.5466.
In the bigger picture, the break of long term trend line resistance from 1.7190 (2014 high) is seen as a sign of long term reversal. However, rise from 1.1946 (2016 low) is not impulsive looking. And the pair is limited below 1.3835 key resistance. Hence, we won’t turn bullish yet and would continue to monitor the development. On the downside, break of 1.3038 support will now indicate that rebound from 1.1946 has completed and turn outlook bearish. Meanwhile, sustained break of 1.3835 should at least send GBP/USD to 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466.
