GBPUSD’s corrective rally may soon reach significant resistance around the 1.40 level, says Tony Sycamore, Director of Australia-based TECHFX TRADERS.
Sycamore’s medium-term view is that GBPUSD’s recent rally is merely a correction within a bear market. He thinks, however, that a close above 1.40 would suggest a more positive picture (see Monthly Chart) and says that COT Positioning Data does in fact provide some tentative support for this more bullish view, with the market net long and with room to increase further (see Positioning Data).
Shorter-term, Sycamore points out that after breaking above 1.3660 and setting new highs for the year, GBPUSD looks set to test the key resistance zone around 1.3850/1.4000. Sycamore expects to see a pullback from this level and if it goes on to break support at 1.3300, he thinks the uptrend will be significantly damaged (see Daily Chart).