Technical outlook:
GBPUSD dropped through the 1.2155 fresh swing lows on Friday before finding bids again. The currency pair reversed sharply thereafter carving an Engulfing Bullish candlestick pattern on the daily chart. It could be an indication of a potential trend reversal. The bottom line is that prices should stay above the 1.2155 mark.
GBPUSD has rallied over 150 pips carving an intraday high around 1.2296 before pulling back lower again. The currency pair is seen to be trading around 1.2155 at this point in writing and is expected to continue higher again. The trading instrument is facing resistance around 1.2650, followed by 1.3150, while interim support is defined at 1.2155 respectively.
GBPUSD has also produced a strong bullish divergence on the daily RSI as seen on the chart. As prices dropped through the fresh lows around 1.2155, the RSI carved a higher low. This is also a potential trend reversal indicator as traders prepare to initiate fresh long positions from here. The bottom line is that prices should stay above 1.2155.
Trading plan:
Potential rally towards 1.2640 against 1.2100
Good luck!
