GBPUSD has shifted its short-term bias from neutral to bullish, moving out of a six-month range of 1.2100 and 1.2700.
The pair is now above the 200-day moving average for the first time since June 2017 and made a fresh 2017 high, as well as reaching its strongest level since October 3 at 1.2904 on Tuesday. From here, prices pulled back as the market reached overbought levels as shown by the RSI which rose to 70.
There is scope for more upside for GBPUSD to reach next resistance at 1.2950 which was a previous area of congestion and support during September 2016. From here, important levels come in at the psychological level of 1.3100 and then 1.3450 comes into view. It was tested as a resistance level several times between June and September 2016.
Only a move back below 1.2600 and below the 200-day MA would weaken the short-term bullish bias and bring the market back to neutral.
Looking at the bigger picture, GBPUSD has yet to retrace half of the drop from the June high, which was above 1.5000, to sub 1.2100 this year. Prices would need to rise to the 1.3500 area in order to achieve this 50% retracement of that decline.
Origin: XM
