The GBPUSD continues its breakout above the 1.3480 area.
I’ve discussed this region for the last few weeks.
As I mentioned recently, the pair has respected 1.3480 on a weekly closing basis.
That meant we needed a weekly close above the level to confirm the breakout, which occurred before Christmas break.
Ever since then, the 1.3480 area has served as support on the weekly chart.
But even more critical than 1.3480 is what’s happening on the monthly chart.
I first mentioned this twenty-year falling wedge on October 5th.
The pattern above signaled exhaustion from sellers and a turn higher for GBPUSD in 2021.
However, we needed a monthly close above wedge resistance near 1.3340 to confirm the breakout.
December did just that, and so far, it’s a textbook breakout.
As for the weekly chart below, GBPUSD needs to hold above the 1.3480 area on a weekly closing basis to remain constructive.
A failure to hold 1.3480 would negate the bullish outlook and expose 1.3370.
On the flip side, GBPUSD bulls need to clear the 1.3700 resistance area.
Do that, and we could see the pound rally toward 1.4350 this year.