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GBP/USD - Chance to Develop Bearish Momentum

GBP/USD fell from almost 1.70 to about 1.6730 so far in May. This could be starting a more significant bearish correction.


(gbpusd 4h chart, 5/19)

However, traders ended last week and is starting this week pushing cable higher. As we get into the 5/19 US session, the pair has pulled back to some key resistance factors.

Resistance factors:
1) Previously broken rising trendline
2) The 100 and 50 simple moving averages in the 4H chart.
3) resistance pivot at 1.6873, which is slightly above the above mentioned factors.
4) RSI is around 60 in the 4H chart. If bearish momentum develops in this time-frame, the RSI should hold below 60 and return below 40 towards 30.
5) 4H stochastic is above 80. If it turns down below 80, we might be seeing a bearish continuation in this time-frame.

Bullish scenario:
If the RSI gets above 60, and price pushes above 1.6875, the market is neutral, and the prevailing bullish trend might come back into focus. In this scenario, traders might be looking to retest the 2014-highs near the 1.70, psychological barrier.

Bearish scenario:
To the downside, a retest of the 1.6730 low should also test a rising trendline that is coming up from the Nov. 2013 low of 1.5853. Below this trendline and the 1.6730 handle, the market opens up the next support/resistance pivot area around 1.6650 in the short-term.