Forex technical analysis: What next for the GBPUSD after break higher.

Breaks to highest level since September 2016

The GBPUSD has broken above the 2017 highs and is extending to the highest level since September 2016.

The price sliced through the topside resistance levels on the hourly (see prior post and chart above) and the high from May 19th from daily chart (see below ) without much problem.

What next?

The September 13, 2016 high comes in at 1.3120. A trend line connecting highs on the daily slashes across at 1.3131 currently. The 38.2% of the move down comes in at 1.3143 (see diThat becomes a target level now.

The pair is moving more into the consolidation area that confined the pair from June 2016 to October 2016. That area is wide at 1.2873 to 1.3532 (see red box).

We are still near the lower portion of that area, but if the idea that

The Fed may be done for now (inflation and growth slow and stagnate Washington),
The BOE continues to be spooked about inflation (and looks to tighten), AND
The technical story remains bullish (i.e. stay above broken levels below down to 1.30289 and get above the 1.3120-1.3143 next hurdles),

THEN the piece are in place for more upside potential and who knows where that can take us.

That is the bullish story that could play out.

The bearish story is

the Fed is not influenced by the data and continue to tighten.
The BOE inflation fear is just a ghost and
Brexit is more difficult.

If that story plays out, the price action and technical levels will show the result.

For now, the break is a key break. The fundamental story is more bullish too.

The market ran through the levels and that is the risk now.

So we need to think higher with an eye to the next targets and also have thoughts that there is room to roam as long as the bullish story line (technically and fundamentally) plays out.

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