A strong positive move stops near the downtrend line resistance

  • GBP / USD gains strong positive traction on Tuesday and regains the 1.3600 level.
  • Bank of England Governor Andrew Bailey downplays speculation about negative interest rates and boosts the British pound.
  • The bulls await a sustained move above a downtrend line before opening new positions.

GBP / USD has built on the previous day’s bounce from the confluence support at 1.3450, and gained strong positive traction during the first half of the European session on Tuesday. The mentioned region comprised the 200-period SMA on the 4-hour chart and the 50% Fibonacci retracement of the positive move from 1.3188 to 1.3704.

The latest move in the sudden rebound came after Bank of England Governor Andrew Bailey downplayed speculation about negative interest rates. Momentum has helped the GBP / USD to rebound to the round 1.3600 level, with the bulls now expecting some continuation buying above a one-week downtrend line.

Meanwhile, the technical indicators on the daily chart have maintained their bullish bias and have again started to gain positive traction on the 1 hour chart. The technical setup supports the prospects for additional earnings. That said, the current rally in US Treasury yields could benefit the USD and limit the rise of the GBP / USD pair.

Therefore, it will be prudent to wait for a sustained breakout of trend line resistance before positioning for any further bullish movement. GBP / USD could accelerate positive momentum towards the horizontal zone of 1.3665 before making another attempt to conquer the round level of 1.3700.

On the other hand, any significant retracement below the 1.3580 region (23.6% Fibonacci retracement) may now find some support around 1.3550. It is followed by the 38.2% Fibonacci, around the key psychological level of 1.3500, which if decisively broken could drag the GBP / USD pair towards the confluence support of 1.3450.

GBP / USD 4 hour chart

GBPUSD

GBP / USD technical levels

.

You may also like