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GBP/USD: Short term bullish

Article published on FX Street on the 15 November 2021

GBP/USD after reaching a 2020 low is set, in our opinion, to a short term recovery.

From the graph is visible how cable has entered on a 6 months bearish channel since the beginning of June. We believe that the cable rate might be soon for recovery: our conviction is based on technical analysis and positive divergence between indicators and price action

  • if we compare the low of 29 September to the recent lows of 12 November we notice a positive divergence between RSI and Price: lower low on the price and higher low on the RSI.

  • On the last descending move, from 1.3820 to 1.3370, the price did not actually respect the bearish channel. In fact, following the pattern we would have expected a fall till 1.3250 to say the list: we see this early inversion as possible upside potential.

  • MACD reached a strong support level that has seen in the past reversal move to the upside and a gain of momentum

  • RSI reached almost oversold territory and is soon to break a descending trendline formed since the high of 19 October.

To conclude, we believe the bearish trend of GBP/USD might be soon for a pause where we see bullish short term targets. A break of the channel at 1.3580, might see a further push at the resistance area of 1.3800.

A possible area of consolidation might also be the 1.3700 level

A rise of the GBP/USD might also bring the FTSE100 to retrace slightly from the current overbought levels

OTB Global Investments

16 November 2021

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