GBP/USD has completed a bullish “reversal day” from just ahead of its 200-day moving average (DMA) at 1.3773. However, the cable needs to close above its 55-DMA at 1.3920 to mark a low, as the Credit Suisse analyst team notes.
A low may be in place
“GBP/USD weakness has been arrested at 1.3803, just ahead of the rising 200-day average at 1.3773 and the subsequent recovery has seen a bullish ‘reversal day’ established to suggest a low may be in place. Above price resistance at 1.3895 is needed to add weight to this view for a move back to the 55-day average at 1.3920.”
“A close above the 55-DMA at 1.3920 is needed to further increase the upside risk and potential basing process for 1.3956, then a fresh challenge on key ‘neckline’, price and 61.8% retracement resistance at 1.3978/1.4010.”
“A break above the 1.3978/1.4010 area would mark the completion of a ‘head & shoulders’ base and a more important turn higher for 1.4099/1.4104 initially and eventually back to the 1.4249 YTD high.”
“Support is seen at 1.3835 initially, then 1.3803. Below this latter level would see the “reversal day” neutralized for a fall to the 200-DMA at 1.3773, potentially even the 61.8% retracement of the July rally and price support at 1.3736/20.”
