Forex Technical Update
The GBP/USD broke below the rising wedge it has been consolidating in during the 11/9 European trading session. The decline was sharp and pushed the 1H RSI reading below 40 and even tagged 30, establishing short-term bearish momentum. Looking at the chart, we see that as we gear up for the US trading session, the market is at an important support pivot at 1.5950, which provided for a rally Nov. 3 and 4. A break below opens up the 1.5880-1.59 support area.
Looking at the 4H chart, we see that below this consolidation support, we open up the 38.2% retracement, 1.5823, and resistance pivot from October as the next support cluster. In the 4H chart the market still maintains bullish momentum as the RSI is held above 40. But if this current price action is the start of a bearish continuation swing, we will see the RSI dip below 40, which would confirm a loss of bullish momentum, and suggest a deep retracement ie. 50%, 61.8%. A conservative bearish target below 1.5780 is the 1.5680-1.5720 support zone (support of October consolidation up to 50% retracement). The bearish scenario is more apparent if these support pivots at 1.5950, and then 1.59 become resistance pivots.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.