Forex Technical Update
The GBP/USD had a pretty flat consolidation with 1.5650 as support, and 1.5934 as the higher resistance pivot. The market has been slightly what risk-on since the LTRO2 was announced to be 530B euros. This has been pressuring the USD, and with a GBP/USD already in an uptrend before the February consolidation, the upside break now opens scope for 1.61. The ability of the RSI to tag above 70 in the 4H chart is good momentum confirmation for the bullish continuation outlook, though in the near-term, it shows overbought condition and a throwback could be anticipated.
As long as the throwback stays above 1.5880, the market should maintain a bullish stance. The daily chart shows that it has broken above the 200day simple moving average. This is a bullish signal. Since rallying from 1.5320, the daily RSI has kissed 70, and then remained above 40, even 50, and is now reaching back above 60, another bullish continuation signal. The next level of interest is just above the 1.61 handle, which has been a resistance zone for the consolidation during Oct-Nov 2011. It was support Aug. 10 and 11, resistance June 30-July 3, and resistance May 24.
Fan Yang CMT is a forex trader, analyst, educator nd main contributor for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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