- GBP / USD catches some aggressive buying on Monday and surpasses the 1.3000 psychological level.
- The technical setup favors the bulls, although it warrants some caution before opening new positions.
- A sustained move above a one-week downtrend line is needed to confirm any further gains.
The GBP / USD pair has extended its strong gains and reached new daily highs, around the 1.3025 region, at the start of the American session on Monday.
Since last week the pair attracted some falling buying near the horizontal zone of 1.2865-60, a sustained move above the 200-period SMA on the 4-hour chart has been considered a key trigger for the bulls. Strong intraday positive momentum has been supported by bullish oscillators on the 1 hour charts.
Meanwhile, technical indicators on the daily chart have started to move into positive territory, although they have yet to gain significant traction. Therefore, it will be prudent to wait for some subsequent purchases above the resistance of a one-week downtrend line before positioning for any further bullish movements.
The mentioned hurdle is near the 1.3025-30 region, above which the bulls are likely to target the monthly highs, around the 1.3080 resistance zone. Momentum could push GBP / USD past the 1.3100 level, to test the next big hurdle near the 1.3160 horizontal zone.
On the other hand, the 1.2940 region (200-period SMA) now appears to defend the immediate decline. If the aforementioned support is not defended, some technical selling may occur and make the pair vulnerable to pull back and fall below 1.2900. That being said, any subsequent decline could still find decent support near the 1.2865-60 region.
GBP / USD 4 hour chart
Credits: Forex Street
I am Derek Black, an author of World Stock Market. I have a degree in creative writing and journalism from the University of Central Florida. I have a passion for writing and informing the public. I strive to be accurate and fair in my reporting, and to provide a voice for those who may not otherwise be heard.