Forex Technical Update
GBP/USD 1H Chart 5/15/2012 9:37AM EDT
The fell over the 5/15 Asian-European session, and continued to slide in early US session.The 1H chart shows the pair tagging the lower bollinger band which is 3 standard deviations from the 200 simple moving average here. The ability to do that and stay below the 200SMA is a reflection of a bearish mode. Similarly, the RSI holding below 60, and tagging 30 is a sign of a bearish market.
In the very short-term though, tagging the lower BB and having the RSI reading fall below 30 are signs of oversold market (in intraday sense).
GBP/USD Daily Chart 5/15/2012 9:45AM EDT
The daily chart shows that as we near 1.60, there is more than just oversold conditions in the 1H chart. There is a key support area down to the 1.5988 pivot. Note the rising support trendline. Also note the RSI nearing 40. A bullish market should keep the RSI above 40 after being able to tag 70.
For now, a bullish outlook from the 1.5988-1.60 area has a target at 1.6150-60, then 1.6250-1.6280 (coincident with a declining trendline).
Tomorrow's Bank of England Quarterly Inflation Report can shake things up a little for the Sterling. BoE governor Mervyn King will hold a press conference. If the report and conference gives the market confidence that QE will be off the table in the UK despite the recession data from Q1, the GBP can continue to be resilient.
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.
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