GBP-USD: Trading Above Resistance

By Mohammed Isah of fxtechstrategy.com

GBP-USD: GBP has broken and held above our highlighted (weekly analysis) resistance levels of 1.6692 and 1.6740, leaving further upside toward its year-to-date high at 1.7041. With a strong upside momentum now seen, the pair looks to resume its medium-term uptrend, which was on hold since early Aug. 5 this year.

An eventual break of the 1.7041 level should cause a further push higher, toward 1.7314 (its 50% Fibonacci retracement of the move from 2.1160 to 1.3501), ahead of the 1.7630 level, its Oct. 12, 2008 high (medium-term outlook). This view is clearly supported by its daily RSI and stochastics, which are bullish and pointing higher, suggesting additional strength.

In case of a pullback, the just-broken 1.6740 and 1.6692 levels are expected to reverse roles and provide support, thereby turning the pair higher again. Other supports below are positioned at its Oct. 29 high at 1.6602; the 1.6464 level, its Nov. 5 low; and the 1.6260 level, its Nov. 3 low. Overall, GBP has its eyes on further upside, having cleared its key overhead resistance levels at 1.6692 and 1.6740.