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GBP/USD Rebounds Sharply but Should Still be Bearish

The 4H chart shows that GBP/USD was making new lows on the year, tagging 1.4635 ahead of the FOMC statement. Then, after the statement and press conference, cable rebounded sharply, pushing all the way to about 1.5165 before being rejected.

GBP/USD 4H chart 3/19

(click to enlarge)

Note that price cleared not only this week's high but also last week's high at 1.5137. However, we can see from the 4H chart that there were heavy sellers just above this high as price retreated back below 1.50. While price did break the 50-period SMA, it held below the 100- and 200-period SMAs and is looking to fall back below the 50-period SMA as well.

A break below 1.49 can revive the bearish bias, especially since the 4H RSI was able to hold under 60, which reflects maintenance of the prevailing bearish momentum from at least the end of February.

These are technical signs that suggest we should not put too much weight on the fact GBP/USD broke above a falling trendline. In the daily chart, we can see that price is still under the 50-day SMA. While the 3/18 candle was a bullish engulfing one, we should see how the next session plays out. Inability to close above 1.50 would be a sign that bears are still in charge. However, if price closes this week above 1.50, we should anticipate further bullish correction towards 1.52 before considering a bearish continuation attempt.

GBP/USD Daily Chart 3/19
(click to enlarge)