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Can Pound buyers defend downside? This is the question right now as the pair has registered an impressive rally, it has passed above two upside obstacles, but now is trading in the red again.
The USDX's drop has punished the USD, which it has depreciated versus the major currencies and not only against the Pound. The US poor economic data has ruined the greenback, the dollar has decreased because the US economy was hit by COVID-19 negative effects.
GBP/USD has rallied after the failure to reach the lower median line (LML) of the orange descending pitchfork, it has jumped above the median line (ML) and above the 50% level, but now has come back to test the broken upside obstacles.
The pair could resume the upside movement if it stays above the broken resistance levels, the next upside targets are seen at 61.8% and at the sliding line (sl1). A minor drop was somehow expected after the last bullish momentum.
The aggressive breakout through the weekly Pivot Point (1.2125) has signaled a potential increase towards the R1 (1.2804) level. Strong resistance is seen also at the 1.2975 - 1.2904 area and at the inside sliding line (sl) of the descending pitchfork.
A consolidation above the 50% level and above the median line (ML) will validate the breakout and will confirm a further increase at least till the 61.8% level and the sliding line (sl1). Only a valid breakout above these levels will confirm an increase towards the R1 (1.2804) level and towards the upside sliding line (sl) of the descending pitchfork.
I believe that GBP/USD could drop again if the price will fail to stabilize above the broken median line (ML). Stochastic indicates an overbought on the daily chart, but you should know that the bias is bullish on the short term if GBP/USD stays above the median line (ML).
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