Forex Technical Update
We saw the GBP/USD in a pullback that rallied to 1.5840 before finding resistance. It showed respect of a head and shoulder and after the non-farm payroll data, the GBP/USD slid below this week's low and is now heading to test the 1.5650 consolidation support. This was support during Jan. 27, 30, Feb. 14, 22, 23. Failure to break this low maintains a sideways market and suggests a short-term bullish market as it it oversold at support.
The daily chart however suggests that even if the market doesn't barrel through 1.5650, it is developing heavy bearish price action against the rally that started in Jan. 2012. Still the RSI is above 40, and will have to break below to reflect loss of bullish momentum.Remaining above 1.5650 with RSI still above 40 means the market is sideways but with a bullish bias, with an outlook back toward the 1.59 area.
If the RSI does break below 40 happens, and the GBP/USD dips below 1.5650, we should open up 1.53-1.5330 support area. 1.56 should also be monitored for support in case of a false breakout. If we get a pullback, ability to hold market below 1.5760, preferably 1.57, should help strengthen the case for the bearish outlook toward 1.53-1.5330.
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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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