GBP/USD’s strong rebound last week suggests short term bottoming at 1.3135, on bullish divergence condition in 4H MACD. Initial bias stays on the upside this week. Sustained break of 38.2% retracement of 1.3675 to 1.3135 at 1.3341 will raise the trend of bullish reversal and target 61.8% retracement at 1.3469 next. Nevertheless, below 1.3230 minor support will bring retest of 1.3135 low instead.
In the bigger picture, price actions from 1.3867 are a corrective pattern within the broader up trend from 1.0351 (2022 low). With 1.3008 support intact, medium term bullishness is maintained and break of 1.3867 is in favor for a later stage, towards 1.4248 key resistance (2021 high). However, firm break of 1.3008 will at least bring deeper fall to 38.2% retracement of 1.0351 to 1.3867 at 1.2524, with increased risk of bearish reversal.
In the long term picture, as long as 1.4248/4480 resistance zone holds (38.2% retracement of 2.1161 to 1.0351 at 1.4480), the long term outlook will remain bearish. That is, price actions from 1.0351 are seen as a corrective pattern to down trend from 2.1161 (2007 high) only. Nevertheless, decisive break of 1.4248/4480 will be a strong sign of long term bullish reversal.
