GBP/USD’s strong rebound last week, and break of 1.3018 resistance, suggests that correction from 1.3514 has completed at 1.2725, after hitting 50% retracement of 1.1958 to 1.3514 at 1.2736. Initial bias remains on the upside this week for 1.3209 resistance next. Firm break there should confirm this bullish case and target a test on 1.3514. However, break of 1.2899 minor support will bring retest of 1.2725 low instead.
In the bigger picture, rise from 1.1958 is expected resume after correction from 1.3514 completes. Next target is 1.4376 key resistance. Reactions from there would decide whether it’s in consolidation from 1.1946 (2016 low). Or, firm break of 1.4376 will indicate long term bullish reversal. However, sustained break of 1.2582 resistance turned support will dampen these views and bring retest of 1.1958 low instead.
In the longer term picture, it’s still unsure whether long term down trend from 2.1161 (2007 high) has completed at 1.1946 already. Focus is immediately on 55 month EMA (now at 1.3471) and sustained break will be the first serious sign of long term reversal. Further break of trend line resistance (now at 1.3922) will be another signal. Focus would then be turned to 1.4376 key resistance for confirmation.