In a recent post we noted a bullish setup in GBPUSD. We noted that a break above 1.2515 would provide a bullish signal that would make us expect price to reach the blue rectangle area at 1.2670-1.2680 with key support at 1.2330.
Red lines- bullish RSI divergence
Blue line -support trend line
GBPUSD is making higher highs and higher lows. Short-term trend is bullish. Price is expected to reach the blue rectangle target as long as price continues to respect the support trend line. Support now is found at 1.2535. It would be a sign of weakness if price were to break below this level. The bullish RSI divergence has provided us with the warning of a weakening downtrend and we timely warned traders for the coming bounce. This bounce seems unfinished with more room to the upside. This view will get canceled if price fails to hold the recent lows at 1.2470.