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GBP/USD: NFP Reaction vs. Key Resistance at 1.50

GBP/USD 4H Chart 4/6

(click to enlarge)

Cable failed to clear below 1.4750 last week and rallied sharply after the disappointing NFP report on Friday, which dragged the USD down across the board. GBP/USD is now heading towards the key resistance and psychological level of 1.50.

A break above 1.50 should open up the 1.5135-1.5165 resistance area. Look for the RSI to tag above 70 and hold above 40 on a subsequent dip if the market is indeed bullish in the short-term. 

However, if price fails to clear 1.50 and falls back below 1.4850, there is a good chance GBP/USD would be back on its prevailing bearish trend, with the 1.4750 support pivot, then the 1.4635 low on the year in sight. Look for the RSI to fall back below 40 as an early warning that the bullish momentum (weak or strong) is gone. Also note that a break below 1.4850 would clear below the 100-, and 50-period SMA and thus revive the bearish bias in the 4H chart.