The GBP/USD currency pair has displayed significant technical shifts over the past few weeks, culminating in a notable bullish rebound from the $1.3561 support level. This price action presents a mix of bullish and bearish signals, making the pair an attractive instrument for scalpers and short-term traders alike. 

In this article, Servelius brokers expertly dissect the topic for a clearer understanding.

GBP/USD Technical Outlook

Two weeks ago, GBP/USD was trading within a well-defined range, and the pivotal level of $1.3467 emerged as a critical short-term resistance. This area proved to be a reliable reference point for scalpers, as a short position from this level yielded strong returns during the session. 

Since then, the technical setup has evolved in a bullish direction, with the pair embarking on a multi-day rally that saw it break beyond key resistance and reach a multi-month high above $1.3700.

However, the bullish momentum didn’t sustain indefinitely. After printing this local high, the pair entered a retracement phase, slipping back to retest newly formed support. The price bounced decisively from $1.3561, suggesting that this level has buyer interest and could serve as a launchpad for further upside.

Key Support and Resistance Levels

The price action has etched out some clearly defined technical zones that traders should be aware of:

• Support Levels:
  • $1.3561: This level recently provided a strong bounce, confirming its relevance as near-term support.
  • $1.3528: A secondary support area that could be tested if downside pressure resumes.

• Resistance Levels:
  • $1.3672: This level now represents a critical near-term resistance that bulls must reclaim to resume the upward trend.
  • $1.3708: The multi-month high, which must be cleared for a full bullish breakout confirmation.

Interestingly, despite the bullish bounce from $1.3561, the recent lower high formations hint at bearish pressure lurking just overhead. The failure to retest or breach $1.3708 on the most recent rally attempt underscores this dynamic.

Market Sentiment and Trading Bias

The lack of directional bias at the moment suggests that GBP/USD is trading within a consolidation phase following the recent uptrend. Traders would be wise to adopt a scenario-based approach, adjusting their positioning based on how the price behaves around these critical levels.

The current neutral sentiment supports scalp trading tactics, both long and short, depending on how the market reacts to intraday support and resistance zones.

Bullish Considerations

From a bullish standpoint, the rebound from $1.3561 is encouraging, particularly as it halted the retracement within a healthy correction range. However, confirmation is needed before entering a long trade with higher conviction.

If price tests the $1.3561 or $1.3528 support again and shows bullish rejection, such as a hammer or bullish engulfing candle, this could offer a scalp-long opportunity with tighter stop losses and modest profit targets.

Bearish Considerations

While the broader trend has leaned bullish recently, the lower highs being established may suggest that bulls are losing momentum.

A decisive break below $1.3528 would likely shift the technical outlook from neutral to bearish, potentially targeting the $1.3475 zone in the short term.

Momentum and Volatility Outlook

The current volatility environment for GBP/USD is moderately high but not extreme, suggesting that scalping setups have enough room to generate intraday profits without getting caught in overextended moves.

The Relative Strength Index (RSI) is hovering around neutral territory, not indicating any immediate overbought or oversold conditions. Meanwhile, moving averages (such as the 20 and 50 EMAs) are beginning to flatten, further supporting the case for range-based strategies unless a breakout or breakdown occurs.

Final Thoughts

The GBP/USD forex pair is currently navigating a complex technical environment, balancing between a recent bullish surge and signs of overhead resistance. The rebound from $1.3561 provides a constructive signal for bulls, but lower high formations temper expectations for a full-blown uptrend continuation, at least in the short term.

For now, the best approach appears to be level-to-level trading, with an emphasis on price confirmation before initiating any positions. Breakouts above $1.3672 or $1.3708 will validate the bull case, while failures at those levels and renewed selling pressure could support a scalp-short narrative.

Traders should remain nimble, monitor price action closely, and be prepared to switch bias based on which technical scenario plays out.