On January 2nd, the market initiated the depicted uptrend line around 1.2380.
This uptrend line managed to push price towards 1.3200 before the GBP/USD pair came to meet the uptrend again around 1.2775 on February 14.
Another bullish wave was demonstrated towards 1.3350 before the current bearish pullback was demonstrated towards the uptrend again.
A weekly gap pushed the pair slightly below the trend line (almost reaching 1.2960). However, significant bullish recovery was demonstrated On Monday rendering the mentioned bearish gap as a false bearish breakout.
Moreover, a short-term bearish channel was broken to the upside following the mentioned bullish recovery on Monday rendering the current outlook for the pair as bullish.
As expected, bullish persistence above 1.3060 allowed the GBP/USD pair to pursue the bullish momentum towards 1.3130 then 1.3200.
For the current bullish outlook to remain valid, bullish persistence above 1.3200 (61.8% Fibonacci expansion level) is mandatory. Otherwise, the current bullish scenario would be invalidated.
Moreover, bullish persistence above 1.3265 (78.6% Fibonacci expansion level) and 1.3333 (100% Fibonacci expansion level) is needed to pursue towards next bullish target around 1.3530 (161% Fibonacci expansion level).
On the other hand, bearish breakout below 1.3170 (50% Fibonacci Exp. level) invalidates this bullish setup rendering the short-term outlook bearish towards 1.3070-1.3050 where the depicted uptrend line comes to meet the GBP/USD pair.
The material has been provided by InstaForex Company - www.instaforex.com