For the last week, GBPUSD has been testing a key support area.
I first discussed the idea of a bullish pound on January 15th. The outlook was contingent on the reaction to the Brexit vote.
Buyers held their ground and are now up more than 400 pips since the January 15th low.
GBPUSD bulls also took out descending channel resistance on the 25th of last month. I pointed out this new support area last Sunday.
The support zone turned out to be a bit lower at 1.3050 rather than 1.3100. But regardless, the bullish outlook is still intact.
Since January 28th, GBPUSD has been consolidating. That isn’t surprising given the 800 pip run-up over the last four weeks.
From here, I’ll be watching for bullish price action above 1.3050.
If we get a bullish pin bar or engulfing pattern, there’s a good chance we’ll see GBPUSD continue higher toward the 1.3260 resistance area.
A daily close above 1.3260 would open the door to the next resistance at 1.3450.
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On the flip side, a daily close below former channel resistance (new support) near 1.3050 would negate the bullish outlook.
As long as buyers are in control, my target will remain the 1.3450 region.