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Fan Yang

GBP/USD Signaling Bullish Outlook

Earlier in July, GBP/USD found support at 1.5330 and rallied to 1.5675 before forming a double top. Despite the double top, price action remained resilient instead of falling. It did slide, but in a choppy structure that eventually formed a falling wedge as we can see in the 4H chart.

GBP/USD 4H Chart 7/22
(click to enlarge)

The 4H chart shows that GBP/USD broke above the falling wedge pattern just ahead of the BoE minutes. The minutes revealed what a lot of BoE watchers are saying - that MPC members are moving towards a more hawkish stance and would have been more certain in their tone if not for the Grexit risk.

Other Bullish Signals:

Along with the wedge breakout we have a couple other signals of bullish continuation at least in the short-term.
1) After price crossed above the cluster of 200-, 100-, and 50-period simple moving averages (SMAs), it then bounced off this cluster of SMAs and appears to be staying above it. This is called a "sling-shot" signal.
2) The RSI has tagged 70 and then held above 40, which signals development of bullish momentum. 

Resistance and Targets:
The 1.5675 high would be the first resistance/target. Then, the 1.58 handle is also a key support/resistance pivot. After that, the most aggressive bullish outlook for this to the next week will be the 1.5890 high on the year. A break above that then opens the 1.60 psychological level.

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