GBP/USD Price Analysis: Test of a triangle breakout near 1.1400 to offer a bargain buy
- A breakout of a triangle pattern is generally validated with a test of the breakout zone.
- An establishment of the cable above the 50-and 200-EMAs adds to the upside filters.
- The RSI (14) has shifted into the bullish range of 60.00-80.00.
The GBP/USD pair is displaying back-and-forth moves around 1.1450 in the Tokyo session. The cable has turned sideways after a sheer rally amid an upbeat market mood. A three-day buying spree in S&P500 indicates that the risk appetite of investors has accelerated.
Meanwhile, the US dollar index (DXY) is facing the heat and has dropped below the round-level cushion of 111.00. Also, the 10-year US Treasury yields have nosedived to 4.09%.
On a four-hour scale, pound bulls are on an adrenaline rush after a breakout of the symmetrical triangle chart pattern. The upward-sloping trendline of the chart pattern is placed from October 12 low at 1.0924 while the downward-sloping trendline is plotted from October 5 high at 1.1496. The asset is required to test the breakout area around 1.1400 for a breakout validation.
The cable has climbed above the 50-and 200-period Exponential Moving Averages (EMAs) at 1.1283 and 1.1309 respectively, which indicates that the trend has shifted towards the north.
Also, the Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which indicates more gains ahead.
Going forward, a test of triangle breakout at around 1.1400 will offer a bargain buy to investors. This will drive the cable towards October 17 high at 1.1440 followed by September 14 high at 1.1590.
On the flip side, a drop below Friday’s low at 1.1060 will drag the asset toward the psychological support of 1.1000. If cable surrenders the psychological support, it will expose to more downside towards October 12 low at 1.0924.
GBP/USD four-hour chart
