FX.co ★ Technical analysis of GBP/USD for October 07, 2022

The GBP/USD pair has been forming a major support and lower highs during the past few days, which can be witnessed by the following mid-term ascending trend line from the level of 1.1204 (second golden ration, 38.2% of Fibonacci retracement levels).

The trend line has rejected the price twice (marked by red circle) and initiated a new bullish leg. The price has to break above the trend line to then aim for the long-term descending channel's upper boundary, marked yellow square. The GBP/USD pair has risen from their recent lows, signaling an increase in volatility in the near term from the prices of 1.1135 and 1.1204. Today, it should be noticed that 1 Pound equals 1.1200 (down -105 | -0.65%).

Yesterday, the GBP/USD pair reached the bottom at 1.1135, then the trend rebounded from the price of 1.1135 to close at 1.1204.

The GBP/USD pair rallied to the 100-week moving average on October 07, a level that could act as a battleground between the bulls and the bears. Several analysts are watching this level because a break and close above it could be the first sign that the bear market may be ending on the hourly chart.

However, the near-term outlook remains bullish for the greenback from the major area of 1.1135 - 1.1204.

On the local time frame, the GBP/USD pair is trading between the support level at 1.1204 formed by the false breakout and the resistance at 1.1259.

Daily range between the price of 1.1204 and 1.1314. Therefore, at the moment the price is near the upper level, which means that one can expect the test of the 1.1314 mark soon in order to re-reach the the double top again.

We should expect an attempt to develop a rise in the price of the GBP/USD pair against the US Dollar and a test of the support area near the level of 1.1204. Where can we expect a rebound up again and a continuation of the climb in the quotes of the GBP/USD pair .

The GBP/USD pair stayed above the psychological level of 1.1204 over the weekend, indicating a lack of urgency to accumulate at the current levels. The bulls are attempting to extend pair's rise above 1.1204.

Technical market outlook :

After finding bids reach to 1.1204, bitcoin price recovered above 1.1135. Initial the GBP/USD pair support lies near the 1.1204 level (38.2% of Fibonacci retracement levels).

A decent breakout and follow-up move above 1.1204 could open the gate for a push towards the 1.1259 level. The main resistance remains near the zone of 1.1259 - 1.1314.

Also it should be noted that the GBP/USD pair unite as the bears lose their momentum. The market is indicating a bullish opportunity above the above-mentioned support levels, for that the bullish outlook remains the same as long as the 100 EMA is headed to the upside.

Trading the GBP/USD pair :

Uptrend scenario :

An uptrend will start as soon, as the market rises above resistance level 1.1204 , which will be followed by moving up to resistance level 1.1259. Further close above the high end may cause a rally towards 1.1314.