Forex Technical Update

Previous: GBP/USD Setting Up Range Between 1.5810 and 1.5940 (4/11)

GBP/USD

GBP/USD

The daily GBP/USD chart shows a market in a rising wedge. The latest development has been 1) a failure to reach wedge resistance (suggests a loss of control by bulls). 2) A lower high after failing to break above the 1.5995 pivot which sent the market down to about 1.5605 to start March (first sign bears are taking over), 3) the RSI failing to break back above 60 (suggesting at least sideways action if not bearish. 4) Stronger down-day candles than up-day candles (4/13′s being an engulfing one - also a sign of bearish dominance).

GBP/USD

Taking a look at the 4H chart, we also see stronger bearish candles than bullish ones, but the momentum is not clear, and the moving averages are aligned in a bullish to sideways manner. Also, the 1.58 pivot can still prove to be support. Before this break, if a rally comes up and respects the 1.59 area, the market should continue to show bearish intent to break below 1.58.

Then there is another support pivot near 1.5770. Clearing that opens up 1.5650 support pivot, then the 1.56 handle.

Fundamentals:

The USD could be effected by some economic releases this week as they will help to determine whether more stimulus is needed. Monday's retail sales and Empire manufacturing data can help trigger the break below 1.58, 1.5770, if numbers come out to suggest a positive recovery track and less need for stimulus. While the USD is starting to track the economy more, it is still also swaying to risk sentiment. Positive equities usually point to a weak USD, so you see the conflict of factors of positive economic data that can prop up equities in the US.

The market is treating the sterling side similarly as far as stimulus. Claimant count, inflation data and BoE meeting minutes are some of the key releases this week. Diverging economic data (poor UK, good US) can very well be the trigger for the break of key support levels the GBP/USD is attacking to start the week.

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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 and IBTrade 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.