GBPUSD has surged higher, brushing aside key resistance levels to test medium-term resistance at 1.2839, says David Sneddon and his team at Credit Suisse.
According to Sneddon, GBPUSD has broken through several important levels: i) Key range highs at 1.2617/24; ii) trendline resistance from December last year; and iii) the falling 200-day moving average. The next test is resistance at 1.2839, which is the 38.2% retracement of the June to October 2016 decline. See Chart.
Extension above 1.2839 would confirm a large medium-term base which Sneddon thinks would signal a bullish core trend change for cable, initially targeting 1.3059, then 1.3121. He thinks a bigger obstacle to any bullish rise is at 1.3255, the 50% retracement level of the June to October 2016 decline.
Sneddon says support can be found at 1.2774/64, then 1.2709/00. Below this, a deeper setback to 1.2624/17 is possible which would need to be held in order to keep the bullish outlook intact.