GBP/USD starts a new week on the front foot

As we expected in the morning outlook, markets are continuing the optimism that began at the end of last week. During the European session, the positive mood accelerated and corrections on many instruments captured new terrain, looking more and more promising.

In today’s piece we’re looking at GBPUSD, which was having a really bad time over the past few months. However, the second half of July is starting to look really promising. Technically, we do have a buy signal here. It’s coming from the fact that the price created an inverse head and shoulders pattern (green) and buyers managed to break the mid-term down trendline (red).

An iH&S got activated today as buyers managed to climb back above the neckline of this pattern (orange area). That means that the positive signal is on. The one thing left before a full scale buy signal is the breakout of the blue down trendline, which has connected lower tops since the beginning of the year. The price closing a day above the blue line would seal the deal in this case.