Forex Technical Update
The GBP/USD has pulled back right before reaching the 1.5728 pivot. The USD pared gains across the board. The 1H chart shows that the pullback brought the market back to the 200 hour simple moving average as well as a declining trendline. The RSI is also back to 60, which acted as resistance while the bearish momentum has been maintained. If the US session holds the GBP/USD under 1.5830, it will be a very strong sign of bearish continuation as it would show respect to the head and shoulder.
However, it should noted that the market has been in an uptrend, and the bearish outlook starts only with a very short-term one that so far entails about a 200-pip drop from 1.5927. Price breaking above 1.5950 and 1H RSI breaking above 60, should suggest bullish continuation, or at least a retest of the 1.59 pivot or 1.5927 high.
The 4H chart shows that despite the market falling almost 200 pips and breaking below the rising trendline, the RSI reading still does not show a loss of bullish momentum as it bounces off 40. If the 1H RSI rises back above 60 and then 70, while the 4H RSI also pushes above 60, we are likely in a bullish continuation. If the 4H RSI is contained below 60, we are likely in some sideways consolidation. Either way, only a break below 40 in the 4H RSI along with a dip below 1.5727 should open up the bearish targets 1.5662 and 1.5580.
Fan Yang CMT is the Chief Technical Strategist for IBTRADE, trader, educator, and a main contributor for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.