- GBP / USD drew some buying on the dips on Thursday and regained lost ground early.
- The technical setup favors bullish trading and supports the prospects for additional earnings.
- A sustained break below the 1.3400 round level is needed to negate the positive bias.
The pair GBP/USD It recovered intraday losses and was last seen trading in neutral territory, just below the key psychological level of 1.3500, or the monthly high touched earlier this Thursday.
Looking at the bigger picture, the recent strong recovery move from the yearly low stopped near a hurdle marked by the 50% Fibonacci level of the 1.3834-1.3161 drop. This coincides with the November 19 high and should act as a key point for short-term traders.
Given the recent move past the 1.3375-80 barrier, the sustained 38.2% breakout of the Fibonacci level overnight and the confluence of the 50-day SMA favors bullish traders. This, coupled with positive oscillators, supports the prospects for a further short-term appreciation move for the GBP / USD pair.
Therefore, a subsequent force towards the next relevant resistance, near the 1.3565 region, remains a clear possibility. The aforementioned surface comprises the 61.8% Fibonacci and the 100-day SMA, and if it clears decisively it would be seen as a new trigger for bullish traders.
On the other hand, the daily swing low, around the 1.3455-50 region, now appears to protect the immediate downside. Any subsequent decline could be seen as a buying opportunity near the 38.2% Fibonacci / DMA 50 confluence of the resistance breakout point and remain capped near 1.3400.
If the aforementioned support levels are not defended, leading to a further decline below the 1.3385-75 region, it could turn the bias in favor of bearish traders. The GBP / USD pair could accelerate the decline to test the 23.6% Fibonacci level, around the 1.3320 area.
Daily chart
Technical levels
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