GBPUSD Weekly Technical Outlook
The 1.30160/1.31960 zone (bound by red horizontal lines) on the GBPUSD monthly time frame represents a significant horizontal resistance zone. While the area was breached southwards in May 2019, market operation retested its lower boundary (1.30160) in October, representing a 61.8 Fib retracement of the preceding downleg from March 2019. However, the November 2019 market operation failed a follow-through.
On the weekly time frame, market operation has broken out of the resistance trendline of a falling channel (black), and a rising trendline (blue) is still in play.
Although technicals on the weekly time frame favour bulls, presently market operation is still sideways around the significant 1.30160 horizontal resistance. As the market operation is close to a significant horizontal resistance zone, the 1.30160/1.31960 zone (bound by red horizontal lines), we may experience a slowdown in bullish momentum which may give way to a southward pullback. The 1.26100 area (forest green) is a significant horizontal support. Therefore, any pullback is likely to target the rising trendline (blue) or the 1.26100 horizontal support (forest green).
Recent price action on the daily time frame is within a symmetrical triangle and, technically, we should expect a breakout from either side of the triangle. Much of the candlestick prints last week indicate an intention of bulls to go further northwards. But as market operation is presently located close to a significant horizontal resistance zone (1.30160/1.31960, bound by red horizontal lines), a bullish drive is likely to be hindered.
Technicals on the H4 time frame indicate that bulls still have room and influence to take price action further northwards; they may retest the 1.301160 horizontal resistance. But beyond that level, they are likely to face some barriers, given the significance of the 1.30160/1.31960 zone as resistance on the monthly and weekly time frames. We should await how price action handles the zone in the early part of this week. Personally, I am looking for a bearish setup within the 1.30160/1.31960 zone, as that will likely offer me a profitable R:R.
I may be wrong. Trade safe and prosper.