GBP/USD: Are the bulls back in town?
The bulls attempted to push the GBP/USD higher on Tuesday, but failed for the second time at the critical 1.59 resistance level. The candle that was printed formed a shooting star, which confirms the strong resistance at the 61.8% Fibonacci expansion from April’s high to June’s low. With the Bank of England having stated that monetary policy is where it needs to be and with more QE from across the pond becoming increasingly likely, the fundamental set up could give the cable the boost it needs to break above this key resistance level. The market has been trading comfortably above the 89 SMA for the past two weeks with the bullish alignment of the 20 EMA over the 50 EMA further supporting the strength of the pair. With the RSI hovering above the 50 level and with the MACD signal line having crossed the zero line since the beginning of August, the market could soon break above the stubborn 1.59 area to target April’s high at 1.63. A bearish scenario seems rather unlikely at the moment. As long as the 1.54-1.55 support area remains intact, any pullback could be seen as a good buying opportunity in the market.
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