US Dollar Forecast: GBP/USD Approaches Channel Resistance
GBP/USD carves a series of higher highs and lows to register a fresh monthly high (1.2679).
Written by
David Song
Strategist
US Dollar Outlook: GBP/USD
GBP/USD carves a series of higher highs and lows to register a fresh monthly high (1.2679), with the exchange rate approaching the upper bound of an ascending channel formation.
US Dollar Forecast: GBP/USD Approaches Channel Resistance
GBP/USD appears to be on track to test the December high (1.2812) as it extends the advance from earlier this week, and a further advance in the exchange rate may continue to push the Relative strength Index (RSI) towards overbought territory as the oscillator sits at its highest level since September.
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In turn, a move above 70 in the RSI is likely to be accompanied by a further advance in GBP/USD like the price action from last year, but lack of momentum to push above channel resistance may curb the recent series of higher highs and lows in the exchange rate.
With that said, GBP/USD may consolidate over the remainder of the month should it struggle to test the December high (1.2812), but the exchange rate may continue to trade within an ascending channel as it no longer responds to the negative slope in the 50-Day SMA (1.2463).
GBP/USD Price Chart –Daily
Chart Prepared by David Song, Senior Strategist; GBP/USD on TradingView
- GBP/USD climbs to a fresh monthly high monthly high (1.2679) as it trades within an ascending channel, with a break/close above the 1.2710 (23.6% Fibonacci extension) to 1.2760 (61.8% Fibonacci retracement) zone raising the scope for a move towards the December high (1.2812).
- A break/close above 1.2820 (38.2% Fibonacci extension) opens up the 1.2900 (23.6% Fibonacci retracement) to 1.2910 (50% Fibonacci extension) region, but lack of momentum to break/close above the 1.2710 (23.6% Fibonacci extension) to 1.2760 (61.8% Fibonacci retracement) zone may keep GBP/USD below channel resistance.
- Failure to defend the weekly low (1.2563) may push GBP/USD back towards channel support, and the exchange rate may threaten the formation if it struggles to hold above the 1.2390 (38.2% Fibonacci extension) to 1.2446 (May low) area.
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--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
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