GBP/USD Outlook: Bulls Regain Traction But More Evidence Needed to Signal Reversal

Technical analysis of Forex market

Cable regained traction on Friday after negative tone prevailed during this week, with three-day drop ending with a hammer candle that generated initial bullish signal.

Fresh advance nearly fully reversed losses of this week but needs lift above pivotal barriers at 1.3887/97 (falling 20DMA / Fibo 61.8% of 1.4001/1.3731 bear-leg) to confirm reversal signal and open way for stronger recovery.

Formation of bullish engulfing today would add to positive tone, but stall of 19-d momentum rally on approach to centreline and subsequent descend, warn that recovery may run out of steam.

Caution on return and close below 10DMA (1.3819) which would weaken near-term structure and keep the downside at risk.

Res: 1.3866; 1.3887; 1.3897; 1.3937.
Sup: 1.3834; 1.3819; 1.3794; 1.3741.