Just over 24 hours ago I discussed how the GBPUSD struggled to climb above the 1.40 handle last week. A view of the daily time frame shows how the level has helped direct price action since the January 30 low.
In fact, the 1.40 area served as support in the months leading up to the June 24th Brexit in 2016.
With the pair now firmly above 1.40 on a daily closing basis (using a New York close chart), the area should begin to attract bids. In other words, any retest of 1.40 should garner support from GBPUSD bulls.
However, be sure to mind the daily mean. With the pair trading nearly 100 pips above the 10 and 20 daily EMAs, we could see some consolidation here before the next leg higher materializes.
Also note that the next 72 hours is jam-packed with several high-impact events. It starts with the G20 meetings which extend into Tuesday’s session along with UK CPI at 5:30 am EST.
On Wednesday we have UK average earnings index at 5:30 am EST followed by a Fed rate decision and statement at 2 pm EST.
As if that weren’t enough, Thursday’s session features a BOE rate decision and policy summary at 8 am EST.
With all of that in mind, I may end up passing on any long setup here. The only exception would be an intraday pullback that allows me to enter with enough time and space to justify the risk. Otherwise, I’ll pass given the unforgiving line up of events this week.
In summary, as long as 1.40 holds on a daily closing basis, the bullish momentum is intact. A close below it would expose new trend line support (former wedge resistance). The next key resistance from current levels comes in at 1.4335, but I do expect turbulence on the way up.