The GBP/USD short to medium term(past few months) trend has been up. As the price managed to form a positive configuration of higher highs and higher lows on the weekly chart.
The breakout back above 1.2590 key resistance level, followed by the most recent breakout above the 18-month long falling trend line, and the 52 week simple moving average have also solidified this short to medium term trend. And suggested a trend reversal more upside towards the longer term 5-years long trend line, currently stands at 1.3200 areas. (My best 6 methods to spotting trend reversal in Forex).
Moving to the shorter term daily chart, the recent consolidation could be taking the shape of a bullish flag pattern, and its forming above the 200 days simple moving average, which are more reasons to have a constructive outlook for the pair.
The bottom of the flag pattern and 1.2750 potential horizontal support, are both just above the 200-days simple moving average. Therefore, a push towards that area would bring RSI to near oversold areas, and might provide an opportunity to enter into this medium term uptrend, with an excellent risk to reward ratio.
For me, the medium term bias should remain positive as long as we are holding above 1.2590 horizontal support and the most recent 3-month long rising trend line. A break below this area will force me to re-evaluate my stance.
What I mean by “my bias is positive” is that I will be looking only for long confirmation signals to buy, and almost ignore any short signals.
Upside targets would be at the most recent main swing high at 1.3000 area. Followed by the long term falling trend line, currently at 1.3200.
To know more about my way of technical analysis, I highly recommend you check out my Forex technical analysis tutorial.
Stay posted for more technical analysis updates