Simple Moving Average(SMA) 50-period (red), 200-period (bold, gray)
RSI-14 with Simple Moving Average 5-period of RSI attached.
Elliott Wave Principles
Market and Price Action (patterns, candlesticks)
Intraday pivots and Intermediate-term support and resistance
Multiple Time-frame Analysis
- The GBP/USD shows a bearish divergence in the 1H chart after developing a butterfly. It is also breaking below a rising trendline and testing the 50SMA. A break below 1.6130 suggests a decline towards 1.6015. The 1.6015 level can been see in the 4H chart at 23.6% retracement, so this is actually a conservative retracement target in the intermediate term.
- In the short-term, it would have retracemed between 50% and 61.8% of the swing from January 30. This target is also the base of the rising action seen in the 1H chart that started on January 31st.
- The 4H chart also shows a completed bullish impulse wave, and therefore a possible correction possibly down towards the 1.57 level if we can break below the 1.6015 short-term projection.
- The daily chart below shows today's price action being rejected from 1.63 area. This was our projection above 1.61. we might be seeing the start of some topping, but it is too early to tell. The RSI in the 1H chart has to at least break below 40 and 30.
- Looking at the daily and the weekly chart, there is still upside risk towards 1.64/1.65 area, the 78,6% retracement, and then the resistance line from 2008.
- For now though, there is a bearish scenario developing in the near-term, and if it can translate to the short-term, should bring the pair down towards 1.6015, and possibly 1.57 before a strong push.
- However, if the decline towards 1.57 does not happen after the reaction to this Friday's NFP, we might see the upside targets reached without a strong correction. A break above 1.6275 then 1.63 targets the 1.64-1.65 area.
Will the Sterling continue the rally Towards the declining trendline going back to 2008? We would love to hear what you think.
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Fan Yang CMT
Chief Technical Strategist