The GBP/USD has extended its recovery after reaching its lowest level since May 10, with the decline bottoming out at 1.24739, just below the November low at 1.24865.
Early in the US session, the pair began to reverse course with more momentum, regaining prior breaks below key November swing levels at 1.2506 and 1.25237 respectively. This move signaled a shift in momentum, pushing the price higher.
The pair has since climbed above the 1.25655 swing area, further reinforcing the bullish recovery. The next key target is the swing zone between 1.2596 and 1.26347. This area represents a significant resistance level, defined by multiple swing highs and lows dating back to mid-November. Breaking this zone could pave the way for further upside momentum.
However, the resistance at this level is expected to be challenging.
On Wednesday, the price did break below the swing area for the first time since November 27, but bounced higher. The rally back higher was capped by the falling 100-hour moving average (blue line on the chart above) , which stalled the move before the price rotated back to the downside and on its way to the low reached today.
With the new low, I would expect that traders should watch for potential selling pressure in the 1.2596-1.26347 region, especially during the initial test of this area. If it breaks above it that is a more important tilt higher and traders will start to focus on the cluster of MAs starting with the 100 hour MA at 1.2627.