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GBP/USD Trading at the Crossroads

GBP/USD has been bearish from 1.7191 down to Septembers low of 1.6051. It has since consolidated, rallying to 1.6524 before retreating. It held below the 200-period simple moving average in the 4H chart, which revives the bearish bias. However, the RSI is struggling to break below 40 towards 30, which reflects a lack of bearish momentum. Also, if price breaks above the current falling wedge seen in the 4H chart, we might have another bullish swing ahead of us.

(GBP/USD 4H Chart 10/2)

If price also breaks above 1.63 it would clear the 100-, and 50-period SMAs again. If the RSI comes back above 60, we can say that the momentum is tilted upwards, since it has tagged 80 and failed to clearly break below 40. 

When we look at the weekly chart, we can see that the GBP/USD is still bullish since 2013. Sure, it has lost its bullish momentum as the weekly RSI dropped below 40. Price also fell below the 50-week SMA taking away the bullish bias.

(GBP/USD Weekly Chart 10/2)

Still, price is holding above the 100-, and 50-period SMAs, and above the 50% retracement of the 2013-2014 rally from 1.4813 to 1.7191. We can also say that price has turned from bearish (since July), to sideways (in September), simply by noting that the 3 weekly candles have been tentative and is a change from the sharply bearish weekly candles before. 

So, if price does break back above 1.63, we should consider the possibility that GBP/USD is turning bullish.