Last week, a bullish momentum pushed GBP/USD to a multi-week high. Will the upward trend survive this week, or will the EU-UK updates reverse the price direction?
Cable Technical Overview
- Critical days for EU-UK free trade deal
- Positive outlook while above 1.3185
Deal or No Deal?
The UK and the EU have entered another intense round of negotiations in Brussels however, time is running up. Nonetheless, the top PM advisor Dominic Cumming’s resignation last week could be a game-changer as he was known for favoring a Brexit without a deal. Both sides' economies are exhausted from lockdowns and coronavirus rising numbers therefore a no-deal scenario is still a possibility but remains unlikely.
GBP/USD Daily Price Chart (September 29 – November 16, 2020)Chart source, Webtrader, Capex.com
On November 11, GBP/USD hit an over two-month high at 1.3312 then retreated as bulls seemed to cutback. On Friday, the price rallied to the current trading zone 1.3185 – 1.3460 indicating that the bullish momentum was still intact.
A daily close below the low end of the zone at 1.3185 signals a weaker bullish sentiment. As such, bears may press towards the weekly support level at 1.2916.
On the flip side, a daily close above the low end of the zone at 1.3185 keeps the door open to a further rally towards the high end of the zone 1.3460.
GBP/USD Four Hour Price Chart (November 3 – November 16, 2020)Chart source, Webtrader, Capex.com
On Friday, GBP/USD rebounded from the bullish trend line originated from November 4 at 1.2913 indicating that bulls were still in charge.
To conclude, while the bullish bias is still in place, a break above 1.3312 may cause a rally towards 1.3433, on the other hand, a break below the aforementioned bullish trend line may correct the price lower and a break below 1.3159 could send the price towards 1.3058. As such, the support and resistance levels underscored on the chart should be monitored closely.
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