GBP/USD: Value shifts higher, 100% fib proj reached

Cycles & Levels: The rejection of 1.2685 weekly swing low with the subsequent recovery above the 50% retracement has resulted in the re-establishment of a weekly range. The elongated buy-side candle on the daily validates the creation of a new leg up, even if it occurs within the context of a down-cycle. There is still a lot of work to be done for the market to turn bullish, with the next hurdle at 1.30 round number ahead of finding building value above 1.31, which as I mark in the chart, is a key area. Even if that materializes next week, a descending trendline is not far above. The hourly has gone through a major shift in order flow, with a very aggressive buy-side campaign creating an over-extended up-cycle that has now reached the 100% fib projection, where the combination of profit-taking, market makers’ offers, and contrarian should see any follow through being very limited in nature ahead of the US NFP, when all bets will be off.

Correlations & Volumes: The sizeable daily candle comes amid the recovery in the UK vs US yield spreads. Most of the volume activity was accumulated just above 1..29, suggesting that any setback will find a wall of orders that and potentially an area to re-engage in buy-side action, even if the directional bias will be largely dependable on the US NFP figures. It’s the first time since October the 16th that the auction process in the Sterling leads to the value shifting higher vs the previous 24h of price action. This is a strong statement that in the short-term, the focus is shifting towards higher levels.