As the 31 October deadline approaches, Ron William, director at RW Advisory, gives his outlook for GBPUSD and says things are starting to look more bullish.
William points out that a positive divergence has emerged in the last month or so between price and the RSI, and in the longer-term three factors suggest a bullish move is due:
1. The Brexit low of 1.1840 from 2016 was tested this summer and held (see Chart 1).
2. GBPUSD is now moving towards the 25% retracement of the 2016 fall, at 1.2640, and is also about to break above the downwards trendline from 2018 (Chart 1).
3. There is a strong 8-year cycle operating on GBPUSD which suggests it should be in a bullish phase (see Chart 2).
However, William warns that a break below 1.1500 would mean the bottoming process has not completed, albeit he sees this as a low probability event.
Watch Ron William’s full analysis.