GBP/USD breakout brings continuation

GBP/USD continues to stay near a dynamic resistance signaling an upside breakout. DXY's sell-off helped the pair to rebound and recover after its retreat. In the short term, the bias is still bullish, so we could search for new long opportunities.

The pound was lifted by the UK Final Manufacturing PMI which has increased from 60.1 to 60.3 points, even though specialists have expected the indicator to remain steady at 60.1 points. The GBP/USD pair has rallied after the US ADP Non-Farm Employment Change was released. As you already know, the indicator was reported at 374K below the 640K estimate which is bad for USD.

GBP/USD Imminent Breakout

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GBP/USD failed to retest the ascending pitchfork's lower median line (LML) signaling strong buyers. Now it challenges the downtrend line again. A valid breakout through this dynamic resistance could indicate an upside continuation.

The pair is located in a strong resistance zone, the 50% Fibonacci retracement level is seen as a strong upside obstacle. GBP/USD needs a bullish spark to be able to resume its upward movement.

Personally, I will wait for a valid breakout above the downtrend line and for a new higher high before I'll consider going long.

Forecast

Jumping, closing, and stabilizing above the 1.3823 level could validate an upside movement. I believe that only a valid breakdown through the lower median line (LML) could invalidate the upside scenario.

Taking out the downtrend line indicates potential growth towards the ascending pitchfork's median line (ML).

The material has been provided by InstaForex Company - www.instaforex.com

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