FX August 19, 2020 / 12:37 pm UTC

Monthly View: Chart GBP/USD - Further Signs of Improvement

By Mike Macdonald
The broad March rally from 1.1400 has cleared multi-month congestion around 1.3000 to reach the 1.3250 Fibonacci retracement and 1.3284 weekly high from late December. Weekly momentum readings are overbought, which suggests there will be consolidation around here before the rising weekly Tension Indicator extends gains further. A later close above here would open up major resistance at 1.3500, where a more significant reaction could unfold.

Monthly charts are also showing signs of further improvement, pointing to a later close above 1.3500 and a run towards the 2007 trendline and 1.3675 retracement. Just beyond here is the 1.3775 multi-year retracement (23.6% of the 2007-2020 fall), which is likely to prompt renewed reactions.

Meanwhile, support is at 1.3000. A monthly close beneath here would add weight to sentiment and delay the rally as prices subsequently track out a multi-week corrective pullback.
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