Bottom line: GBPUSD bullish structure remains intact until prices stay above 1.1414 lows. A corrective drop might be expected before the rally could resume towards 1.3515 levels going forward.
Technical Analysis:
GBPUSD bulls are seen to be taking control back after staging a rally of over 1000 pips between 1.1414 and 1.2485 until Friday close. A potential bottom might be in place at 1.1414, and a series of higher lows and higher highs could be seen going forward.
A corrective drop might be underway since 1.2485 levels and GBPUSD might find support close to 1.2100 levels going forward. Please note that the 38% fibonacci retracement of the entire rally is also seen at 1.2080 levels, the potential support zone. Most traders might be willing to initiate fresh long positions between 1.2080 and 1.2100 levels, with protective stop loss at 1.1900 and projected targets above the 1.3515 levels in the short term.
Please note that GBPUSD is expected to hold above 1.1900 levels if an impulse is underway from 1.1414 levels. Keeping the risk reward ratio in mind, most traders might be able to reduce risk as they prepare to go long again.
Immediate price resistance is seen at 1.3515, the December 13, 2019 high. Bulls might be inclined to push above 1.3515 levels, to register themselves and confirm that the trend has reversed. If the above holds well, GBPUSD might have completed a multiyear correction at 1.1414 levels.
The weekly chart also confirms an engulfing bullish candlestick pattern to be completed over the last week rally. This also indicates a potential reversal ahead, after the ending diagonal terminated at 1.1414 levels.
Overall structure for GBPUSD looks constructive for bulls as most traders might be preparing to buy on dips towards 1.2080/1.2100 levels as described above. GBPUSD might be heading to complete an impulse wave going forward.
Prepared by
Harsh Japee, Technical Analyst.
GBPUSD Chart
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