How much higher could GBP/USD trade?
GBP/USD reached a near-term low on November 10th at 1.1334. As the US Dollar continued to move lower, GBP/USD continued to move higher. The pair reached a high of 1.2034 on November 15th and pulled back in a pennant formation on the 240-minute timeframe. As price reached the apex of the pennant, it broke out to the topside on November 22nd. The next day, GBP/USD continued to move higher as it took out the previous highs of the pennant.
The target for a pennant is the height of the pennant “pole”, added to the breakout point from the pennant. In this case the target is near 1.2600, which is also the highs from early June. However, if price is to get there it must first pass trough horizontal resistance from the highs of August 10th at 1.2277 and then additional resistance at the lows of June 7th at 1.2431.
Notice, though, that the RSI is in overbought territory, indicating that a price correction may be ahead. If GBP/USD does pullback, first support is at the apex of the wedge between 1.1815 and 1.1845. If the pair breaks below, horizontal support sits at the lows of November 15th near 1.1710, then additional horizontal support at the highs from November 9th at 1.1600.
The price action indicates that GBP/USD could move higher with a target near 1.2600. However, the RSI indicates that there could be a near-term pullback first. The US Dollar seems to be driving this pair. If it continues to do so, then a lower DXY could mean a higher GBP/USD.
The target for a pennant is the height of the pennant “pole”, added to the breakout point from the pennant. In this case the target is near 1.2600, which is also the highs from early June. However, if price is to get there it must first pass trough horizontal resistance from the highs of August 10th at 1.2277 and then additional resistance at the lows of June 7th at 1.2431.
Notice, though, that the RSI is in overbought territory, indicating that a price correction may be ahead. If GBP/USD does pullback, first support is at the apex of the wedge between 1.1815 and 1.1845. If the pair breaks below, horizontal support sits at the lows of November 15th near 1.1710, then additional horizontal support at the highs from November 9th at 1.1600.
The price action indicates that GBP/USD could move higher with a target near 1.2600. However, the RSI indicates that there could be a near-term pullback first. The US Dollar seems to be driving this pair. If it continues to do so, then a lower DXY could mean a higher GBP/USD.
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