GBP/USD – Bullish break on chartsGBP/USD clocked a high of 1.4451 on Friday, before trimming gains to end the day at 1.44. The day end closing was just above the inverse head and shoulder neckline level of 1.4395.
The upside break comes after US President Obama urged Britons to vote in favor of EU membership. GBP bears worry that could force Britons to rethink about the consequences of Brexit and consider voting for and not against EU membership. Note that latest polls have shown a sharp rise “undecided” category. This represents rising caution on account of uncertainty surrounding the impact of Brexit and usually under such situations people end up favoring status quo, which in this case means “in” vote. No wonder then Sterling is on the rise off late and may continue to do so unless a political bigwig in the UK throws his weight behind “exit” vote and/or polls show a sharp rise in “exit” vote.
The data calendar in UK and across the pond is light, hence doors are wide open for chart driven trading to take control of the pair. Asian equities have begun the week on a back foot and a similar action in FTSE and other major European markets could kill demand for high yielders.
Daily Chart
Pattern – Inverse head and shoulder breakout
Resistance – 1.4472, 1.4514, 1.4566
Support – 1.4425, 1.4389, 1.4350
Resistance at 1.4514 stands exposed as Cable’s inverse head and shoulder breakout on the daily chart couple with a bullish daily RSI has reinforced bulls.
Spot is attempting a rebound from 100-DMA level of 1.4425 after failing near 1.4472 (76.4% of 1.4669-1.3835) in Asia.
Fresh intraday demand could be anticipated if the spot jumps above 1.4472.
On the downside, area around 1.4390 is a strong support, which if taken out on daily closing basis would signal the bullish break was a “fakeout”.
