GBP/USD Renewed Its Rally

After the drop from 1.3655 to 1.0268 the pair renewed its rally and at the moment it is at 1.3300 – 1.3320. That is a resistance level on the D1 time frame and it is possible the pair will have a difficulty breaking out above it.

Yesterday’s daily bar, however, is strongly bullish with a long lower shadow, which is a signal that the bulls have used the corrective drop to aggressively open long positions. If the tendency for a move to the upside remains we could expect that after a breakout of the resistance on the D1 time frame the pair will head to the trend line of the channel (in red) that it once broke out above and in the medium term it could break out above it again.

To the downside the pair could find a support in the zone around 1.3030 – 1.2980. If there is a breakout below that zone and it manages to remain below it we should watch for a renewal of the downward trend.