GBPUSD is on the cusp of completing a classic bull wedge continuation pattern, says David Sneddon and his team at Credit Suisse in London.
After holding the 23.6% retracement of the August to October rise at 1.2769, GBPUSD has continued to push higher (see Chart). Sneddon thinks a clear and sustained break above 1.2976/85 would reinforce the rally, with the next resistance seen at the 1.3013 high, then 1.3077 – the 78.6% retracement of the 2019 downtrend. Above 1.3013 would trigger a classic bull “wedge” to reinforce his bullish bias, with the next level at 1.3077.
Sneddon sees major long term resistances from the 200-week average, which capped the market in both 2015 and 2018, as well as the potential long term downtrend from 2014, at 1.3117 and 1.3187/88 respectively. He thinks these are likely to prove very tough barriers to clear.
Support moves initially to 1.2944/42, which should ideally hold to maintain the upside pressure. Sneddon says that only a break below 1.2897/89 would negate the potential for a bull “wedge” and turn the focus back lower within the range.