The US NFP report stirred up market activity. The pound sterling resumed an upward movement immediately after its release. It was rather strange given that unemployment dropped to 3.9% from 4.2% versus the forecast reading of 4.0%. Nevertheless, the report turned out to be quite upbeat and the US labor market improved significantly. Market participants paid attention largely to the number of new jobs created outside the agricultural sector. The economy added only 199,000 jobs instead of 425,000 expected by analysts. Yet, even this increase is quite a positive sign. The labor market has shown levels close to those observed in late 2019 - early 2020. Back then, the labor market was the healthiest and most stable in its entire history. Besides, the current number of new jobs is quite enough to keep unemployment under control. So, conditions in the labor market are unlikely to worsen. Therefore, the content of the report is quite optimistic. Thus, the upward movement of the pound sterling is rather puzzling. Recently, the British currency has shown unexpected swings which may indicate high speculative activity. As a result, traders should be alert as the pound sterling may decline drastically. The question is what exactly will trigger the reversal.

US NPP data:

The GBP/USD pair is hovering near the resistance level of 1.3600. There was a drop in the volume of long positions near this level. This led to a slowdown in the upward movement and price stagnation.

On the 4H chart, the RSI indicator is moving along the upper area of the 50/70 lines. So, an upward movement persists in the market. Everything may change if the middle line is crossed downwards. In this case, the resistance level will trigger a trend reversal.

On the daily chart, there is a corrective movement from the pivot point of 1.3170. Despite quite a significant rise, bears are still holding the upper hand.

Outlook:

A price reversal from the resistance level may lead to the strengthening of the bearish momentum. After that, the pound sterling may gradually drop. This scenario fits into the concept of market cycles where the downtrend still prevails in the market.

As for the alternative scenario, the quotes should hold above the 1.3600 level on the daily chart. In this case, the downward trend that originated in June last year may well be replaced by an upward one.

The complex indicator analysis gives mixed signals on short-term and intraday charts as the price is fluctuating within the resistance area.