Ahead of this week’s wages/employment data, the technical position for the GBP/USD leans in favour of bulls.

Monthly Resistance Cedes Ground

Following two months of downside, GBP/USD bulls pencilled in a solid offensive last week (+1.6%), drawing the currency pair through resistance on the monthly timeframe at $1.2715. While one may argue that this market is now in the early stages of an uptrend, the next layer of resistance at $1.3111 is pivotal as a break of here demonstrates a clear higher high and a well-defined foundation for a longer-term uptrend in the GBP against the US dollar. Reinforcing further outperformance this week/month is the Relative Strength Index (RSI) on the monthly chart recently manoeuvring above the 50.00 centreline, a move indicating positive momentum: average gains beginning to exceed average losses.

YTD High Achieved; Daily Resistance Challenged

From the daily timeframe, the trend is firmly directed to the upside after refreshing year-to-date highs on Friday. However, although room to trade higher on the monthly chart is evident, daily resistance also entered the fold on Friday at $1.2890, a level attracting mild end-of-week selling. At this point, daily support is between $1.2795 and $1.2817.

As the monthly and daily uptrend suggests, a break of $1.2890 this week would possibly invite a test of daily resistance at $1.2940, closely shadowed by the swing high (27 July 2023) at $1.2996.

Short-Term Whipsaw Through Decision Point Eyed

After leaving the $1.29 handle unchallenged, price action on the H1 timeframe wrapped up the week modestly retreating and testing a decision point at $1.2825-$1.2840. Considering the technical landscape on the monthly (bullish) and the daily (fading resistance), a whipsaw of the current H1 decision point (see red arrows) could be seen this week to attract buyers. Whipsawing beneath the decision point would likely fill short-term sell stops and provide liquidity for some buyers off daily support highlighted above at $1.2817 (a point of interest for buyers is perhaps the location in which H1 trendline support converges with the daily level [extended from the low of $1.2600]).

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