GBP/USD traded slightly higher on Tuesday, after hitting support near the psychological 1.3000 barrier on Monday. Overall, the pair has been trading within a rising channel formation since September 25, and thus, we would consider the short-term outlook to be positive for now.
Nonetheless, in order to start examining higher areas, we would like to see a decisive break above 1.3074 first, a resistance defined by yesterday’s high. Such a move may signal the beginning of an impulsive wave within the rising channel and may initially target the peak of October 23, at 1.3124, or the high of October 21, at 1.3175. If neither area is able to stop the advance, we may then see the bulls pushing for the crossroads of the 1.3255 zone and the upper bound of the channel.
Shifting attention to our short-term oscillators, we see that the RSI lies flat near its 50 line. The MACD is also flat, near both its zero and trigger lines. Both indicators detect a lack of directional momentum, supporting the view to wait for a break above 1.3074 before getting confident on the continuation of the current uptrend.
On the downside, we would like to see a dip below 1.3000 and the lower end of the channel before we abandon the bullish case. If such a move occurs, the bears may get encouraged to target the 1.2905 barrier, or the 1.2863 hurdle, which provided strong support between October 6 and 16. Another break, below 1.2863, may extend the slide towards the low of September 30, at 1.2804.