Everything British Pound lost the week before it did recover last week. This is the real nature of Forex market. Real trends are rare and currencies too often stay within ranges. Lots of ups and down happen before market goes anywhere without turning around next day or next week.
Last week it ended touching 1.5660 level. This is the exact spot it started the week before. What can we expect this week?
gbp/usd 2 hour chart (market comes back where it left the week before)
1.5670-1.5700 is key resistance
It is obvious that we have strong resistance at 1.5660-1.5700 levels. The area has been rejected at least 7 times in 30 days. It does mean something. However, one day any resistance or support level is broken and price goes wherever it wants to go.
Is false break possible?
False break above the high is really possible and will probably happen. However, you must remember that the more price plays with some level, the pressure is created and when finally the break occurs we can surely expect some momentum to continue and a trend or at least a short term swing to develop.
I think there will be some more horizontal work this week and price will eventually break through key resistance.
COT data implies that long British Pound positions are increasing and a move up is very likely any time now.
Break higher is very likely