GBP/USD To Consolidate This Week

Analysis - GBP/USD (last 1.5448) is likely to consolidate this week as the daily MACD indicator is bearish, but the stochastic measure is bullish near the oversold level. Resistance is at Wednesday's high of 1.5491; a breach would expose the upside to the 1.5580-1.5597 band, marked by the Aug. 30 high and the Aug. 26 high; and then to 1.5620, the Aug. 23 high. An extension of the rise would target the Aug 16 high of 1.5707, and then the Aug. 10 high of 1.5910. Support is at Tuesday's low of 1.5325, matching the 38.2% Fibonacci correction of the advance from the May 20 low of 1.4230 to the Aug. 6 high of 1.6002; a breach would reinstate the near-term negative outlook, opening the way down to the July 21 reaction low of 1.5123, which is near the 50% correction level as well as the 100-day moving average. An extension of the fall would target the psychological 1.5000 level. GBP/USD may consolidate over the next few weeks as the weekly chart is mixed: the weekly stochastic measure is falling from the overbought level, but the weekly MACD indicator is still bullish. A fall below the 1.5123 support would expose the downside to 1.4946, the July 12 reaction low, and then to the 61.8% correction level of 1.4907. But a rise above the Aug. 6 reaction high of 1.6002 would reinstate the positive medium-term outlook, opening the way up to the Jan. 19 reaction high of 1.6457, and then to the Nov. 16, 2009 reaction high of 1.6877.