GBPUSD stalled its recent rally after touching its highest level since June 2016 but continues to trade in bullish environment as it maintains a positive trend and technical indicators signal that the market might retain this bullish phase in the medium-term.
The market crawled well above the simple moving average lines (SMA) which are currently positively aligned and show no sign of reversing direction, while the Tenkan-sen is positively sloped above the Kijun-sen. However, downside corrections in the near term cannot be ruled out yet as the RSI continues to fluctuate above 70, hinting that the market might be overbought. Stochastics are also moving downwards after reaching overbought territory above 80.
Immediate support is now at the 38.2% Fibonacci of 1.3962 of the upleg from 1.3345 to 1.4344. A stronger barrier, though, would be found at the 20-day moving average of 1.3811, which if violated would confirm that another leg down is underway with scope to reach next support at 1.3556.
On the flip side, if prices improve, resistance could come from the 1.41 handle. Further increases could also shift focus to the 1.42 psychological level and the previous top at 1.4344.
Turning to medium-term picture, the outlook is positive as long as prices remain above the September’s high of 1.3655.
Origin: XM
