GBP/USD Technical Outlook
- Pullback has the 14000 level in focus as support
- Support is important for short-term outlook
- Longer-term there is a bigger line of support to watch
Pound Technical Outlook: GBP/USD Testing Support, Trend
GBP/USD shot above the 14000 threshold to start the week, but now that old level of resistance is viewed as a potential form of support. But will such strong resistance hold as a new source of support? The short-term outlook looks to depend on it.
So far today we are seeing it hold, but in the absence of a surge in buying it hasn’t been fully proven. Ideally, we see a push lower into the 13900s followed by a forceful rejection to close on a daily basis beyond 14000.
But even if we don’t get the desired reaction here, will continue to respect it as support until broken. In the event support holds, then the next meaningful swing-high to watch is the February high at 14241. Crossing this threshold won’t quite yet get cable in the clear for a broader rally as the high from 2018 at 14376 needs to be overcome.
That would be a big level to cross given there is nothing to the left until the Brexit high at 15018, a level that at some point appears likely to be reached. However, that is a thought that has been on my mind for several years. The path has been anything but certain, taking some massive detours on the way.
Getting back to the short-term. In the event we don’t see the 14000 level hold, then look for a dip back to the one-year channel line just under 13900. This would be an important longer-term line to hold in order to keep GBP/USD moving in the ‘right’ direction. A break of that line seems likely to cause a bout of weakness back towards the 13500 level, if not worse.
For now, the big focus is on seeing if cable can hold important support and shaping the near-term trading outlook around it.
GBP/USD Weekly Chart (Big levels up and down)
GBP/USD Daily Chart (14000, lower channel line)
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—Written by Paul Robinson, Market Analyst
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