GBPUSD built the foundation for a new bullish wave after completing a morning star candlestick pattern with a tall green candle on Monday.
The cheering setup occurred near the surface of the broken descending channel, which acted as a lifesaving support this time, and around the previous low of 1.3570, further endorsing the case for an upside reversal.
In momentum indicators, signals are encouraging as well given the clear rebound in the RSI and the Stochastics, though the former has yet to climb above its 50 neutral mark, while the MACD remains below its red signal line despite somewhat easing its negative momentum.
Hence, some careful attention is still required as the price is approaching the restrictive 200-day simple moving average (SMA) at 1.3797, while within a short distance, the 50- and 20-day SMAs and the tough 1.3874 resistance could also immediately ruin the bullish mood. Higher, the rally could extend up to July’s peak of 1.3982.
Alternatively, a downside extension may retest the channel’s upper boundary and the recent lows around 1.3600. If this floor collapses, the way would clear for the 1.3500 -1.3455 area.
Summarizing, GBPUSD has set the stage for the next bullish round, but the path could be rocky as the price is converging towards a key resistance territory.
