GBP/USD Determined To Jump Higher!

GBP/USD rallies and resumes yesterday‘s rebound, it is traded at 1.2649 level, so the uptrend remains intact in the short term. The pair has rebounded as the USD was punished by the USDX’s drop.

Unfortunately, the Dollar Index has found strong resistance at 97.36 level, and now is traded at 96.51. A USDXs further drop at least till the 96.00 will weaken the dollar, which it will depreciate versus its rivals again.

The US data will be crucial for the USD today, the Retail Sales is expected to increase by 7.9% in May, after the 16.4% drop in April, while the Core Retail Sales could increase by 5.5% in the last month. The FED Chair Powell Testifies will add volatility into the markets, most likely the GBP/USD will react as well after this high impact event.

Also, the US is to release the Industrial Production, which is expected to increase by 3.0% in May, versus 11.2% decrease in April, the Capacity Utilization Rate could climb from 64.9% to 66.8%, while the Business Inventories could decrease by 0.8%.

So, the USD could strike back and it could take the lead again only if the US data will come in better than expected, otherwise, the greenback could drop further versus the other major currencies.

GBP/USD has found strong support right on the 50% retracement level, below the 1.2485 static support, and now is almost to reach the 61.8% upside obstacle. The pair has decreased a little after it has reached the median line (ML), but it seems that the decrease was only a temporary one and the price could approach the median line (ML) again.

The median line acts as a magnet, it attracts the price, GBP/USD could register a valid breakout above this dynamic resistance if the rate stays near this obstacle. The pair is bullish as long as it is traded above the 1.2485 static support, I believe that only another lower low could signal an important drop.

A valid breakout above the median line (ML) will announce a larger increase in the upcoming period, maybe towards the 1.3514 higher high. On the other hand, a failure to reach the median line (ML), or a false breakout with great separation above this line could signal another strong leg lower in the short term.

You can see on the H4 chart, that GBP/USD has registered only a false breakdown with high separation below the 50% level signaling bullish momentum after the minor drop. Also, the failure to approach and reach the median line (ml) of the minor black descending pitchfork has suggested a rally towards the upper median line (uml).

The first upside target is seen at the 61.8% level, while the second target is at the upper median line (uml) of the descending pitchfork. Another higher high, a valid breakout above the upper median line (uml), and above the median line (ML), will bring a long opportunity, this scenario could take shape if the US data will disappoint later.

A larger drop, corrective phase, will be confirmed only if GBP/USD will drop and stabilize below the 50% retracement level, if the pair will make another lower low.

【About Olimpiu Tuns】

Olimpiu Tuns is a seasoned market analyst / trader / trainer on the financial markets with expertise in forex, cryptocurrencies, commodities, futures, options, index, CFD for more than 8 years. He is also a famous blogger in both technical and fundamental analysis, trading signals, trade setups, etc.

He has worked as a Market Analyst / Consultant for three major Brokerage companies, Admiral Markets, MultiBank Exchange Group and InstaForex (live webinars, market analysis, educational materials, video analysis, video tutorials, ghostwriting, content creator), as a Social Media Manager and as a Financial Markets & Crypto Analyst / Contributor for very important news portals/blogs (investing.com, benzinga.com, forexalchemy.com actionforex.com, countingpips.com), websites, educational platforms (Forex.Academy, Forex.Today), independent clients, etc.

Olimpiu Tuns currently works as a Financial Markets & Crypto Analyst / Signal Provider / Trader / Trainer.

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