GBP/USD rallies and is almost to pass above 1.3624 former high. Technically, it could hit fresh new highs if the USDX continues to drop. Unfortunately, the latest US data failed to support the greenback's rebound.
You still have to be careful even if the pair is strongly bullish as the price is traded within a resistance area. Any rejection, false breakout, or a reversal pattern could send the rate down.
USD drops after the Personal Income, Personal Spending, New Home Sales, and the Revised UoM Consumer Sentiment have disappointed in yesterday's trading session.
GBP/USD Edges Higher!
The rate has reached the fourth warning line (wl4) which is seen as a potential strong dynamic resistance. A false breakout or a bearish engulfing right on this line signals that the bullish momentum is over and that the sellers will take the lead.
GBP/USD is traded at 1.3616 at the time of writing and it could hit the 1.3524 high soon. It remains to see how the rate will react around this area. A new higher high, bullish closure above 1.3624 signals further growth.
Personally, I would like to see a valid breakout above the warning line (wl4) before considering going long. Closing the major gap down signals strong buyers and further growth in the upcoming period.
GBP/USD TRADING TIPS!
Closing and stabilizing above the fourth warning line (wl4) could lead to further growth to the R2 (1.3820) level. 1.3539 is seen as near-term static support, so the rate could come back to test and retest it before jumping higher.