Last week GBPUSD bulls pulled off a major victory. The 1.3290 handle has capped every advance since the pair closed below it on October 2. So, last Wednesday’s close was significant in that it broke the two-month range.
However, as I mentioned over the weekend, buyers still have their work cut out for them. The trend line that extends from the 2014 high continues to serve as resistance. That level comes in between 1.3370 and 1.3400.
That same trend line was partially responsible for rejecting the mid-September advance. And because it has directed price action since 2014, a breakout would be a significant development for the pair.
Do keep in mind that there is a horizontal level just above current prices at 1.3445. It’s the September 2016 high and was an area that rejected several rallies shortly after the infamous Brexit vote last year.
With that in mind, it may not be a bad idea to wait until the GBPUSD clears 1.3445 on a daily closing basis. Doing so would provide additional confirmation that prices have broken the 2014 trend line.
For now, though, the pound sterling remains range bound between 1.3290 support and 1.3370/400 resistance. A daily close above the latter would expose the 1.3445 resistance area followed by 1.3640/50.
Alternatively, a daily close at 5 pm EST back below 1.3290 would tarnish the bullish scenario. It would also re-expose channel support, which now comes in somewhere between 1.3180 and 1.3200.
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