GBP/USD at Another Support Cluster in the 1.5770-1.58 Area

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GBP/USD 4HChart 5/17/2012 11:04 AM EDT

Since the dovish BoE inflation report and Mervyn King press conference, the sterling has been weak, and the GBP/USD has been sliding sharply. After a brief pause at 1.59, the market fell sharply to 1.58 and is now testing an area of support cluster from 1.5770 to the 1.58 handle.

Looking at the daily chart below, the 1.5770 level is 50% retracement of the 2012 rally from 1.5237 to 1.6305. There are also a bunch of support pivots around 1.5780 that was holding in March through mid-April. This use to be a key resistance pivot back in Nov through Dec. 2011.

Can we get a bounce here? Technically we might be ready, but there is missing a fundamental trigger, that can bring about some risk appetite and suppress USD's onslaught.

If we get a bounce, 1.6050 should be the maximum target, with 1.5980-1.60 area also a possible resistance with selling interest.

Bearish continuation below 1.5770 opens up 1.5645-1.5650 area and the 1.56 support pivot.

GBP/USD Daily Chart 5/17/2012 11:10 AM EDT

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Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.