GBP/USD – Weekly outlook 17 Oct – 21 Oct
In recent trading days we’ve seen the bull’s starting to take control of cable once again; pushing the pair to its highest price since mid September. Although the recent bullish momentum has been picking up pace, this could been seen as a ‘pull back’ before seeing markets slide lower once again.
Cable is nearing strong upper resistance & 1.60 which proved to be a strong S&R level earlier in the year, not to mention its psychological affect on the market being a whole/round number.
In the chart below we can see the market pushing towards previous support at 1.5900 which could potentially turn in to resistance rejecting any move higher.
1.6100 is also an important area for the cable as it has shown to be a strong support/resistance area in July & August. Last Thursday’s daily candle closed as a bullish inside pin bar suggesting we may see further moves to the upside.
You may also notice that this recent bullish move was formed by a Hikkake pattern.
Similarly to the EUR/USD the cables resistance area is further supported by Fibonacci retracement levels. The 61.8 retracement is almost exactly where we have identified the strong resistance area at 1.6100. The price action S&R combined with the Fib retracements strengthen the likelihood of seeing a ‘bounce’ from the areas/levels mentioned.
We will be looking for price action rejection signals at 1.5900 – 1.6100 with the bias of shorting this market back down to early October lows.