Forex Technical Update

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GBP/USD Chart Day 6/27/20127:45AM EDT

GBP/USD

Looking at the 1H GBP/USD chart for the short-term technical picture, we see a market that has been rallying this week from the 1.5544 level capped at the 1.5655 level, which was support on June 20. Also at the 1.5650 area is the 200-hour simple moving average. The GBP/USD is also testing June's broken trendline support as resistance.

On the other side, the market has supported by a rising trendline going back to June 25.

As we start the June 27 US trading session, the market tests this rising trendline, trading in the crossroad between converging support and resistance.

It seems like volatility is slowing ahead of tomorrow's EU summit. The market is in risk-on/risk-off mode where risk-on is bad for the USD (positive for GBP/USD), and risk-off is good for the USD (negative for GBP/USD).

A breakout above 1.5655 can be a sign that the market wants to price in a some optimistic view on the summit, quite opposite of the sentiment we had so far since last Thursday (6/21). A near term resistance to monitor is the 1.5690(61.8% retracement)-1.57 psychological pivot. A push above that opens up June's high at 1.5787, but it would need to be something very shockingly positive (like Merkel agreeing to eurobonds) to push higher.

On the other hand, the market's ability to push below the trendline and 1.56 can show that the sentiment remains bearish since last week. This opens up the possibility of another leg down that can test 1.5544 and may even break lower.

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 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.