GBPUSD broke above a significant confluence of resistance at 1.2740 on Thursday.
Now the question is, can bulls hold the pair above the area next week?
Given the extent of this week’s rally, we will likely get a retest of 1.2740 as new support next week.
But there could be a GBPUSD opportunity regardless of whether that area holds as new support or fails.
If it holds as support, we could see the pound rally extend toward 1.3170.
The two-week time frame shows it best.
That would be a considerable 430-pip move for GBPUSD, but only if bulls can hold the market above 1.2740 next week.
Alternatively, a failure at 1.2740 would present a short opportunity.
However, a confirmed failure will require at least one, preferably two, daily closes below the 1.2720-1.2740 area next week.
But a breakout is a breakout until proven otherwise.
So unless we see GBPUSD trading below 1.2720 on a daily closing basis, I have to respect this week’s bullish breakout.
Next Wednesday’s UK CPI and Thursday’s BOE rate decision will likely determine what we get from 1.2740.
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