Simple Moving Average(SMA) 50-period (red), 200-period (bold, gray)
RSI-14 with Simple Moving Average 5-period of RSI attached.
Elliott Wave Principles
Market and Price Action (patterns, candlesticks)
Intraday pivots and Intermediate-term support and resistance
Multiple Time-frame Analysis
- The GBP/USD developed a flag pattern after rallying since 1/7/2011.
- The 1H chart shows the pair pushing back towards 1.59 or a bit lower where we will test a rising trendline (seen more clearly in the 4H chart).
- The RSI has broken below 40, and suggests we are in a bit of a correction from the rally. The question is where will this correction take the pair. We have not even seen 38.2% retracement of the rally since 1/7. If we have a zig zag type correction, the market can extend it towards 1.5810 (38.2% retracement).
- The 4H chart shows a rounded top in the RSI as the price action continued higher, creating a bearish divergence.
- Our bullish anticipation in the intermediate term is being tested at the moment, with a short-term correction decline. This decline can be a wave 4, a corrective wave before another bullish attempt, in the context of a developing bullish impulse wave.
- Looking at the Day chart, we see the 1.61 as a possible target for the bullish outlook, at fibonacci retracement level of 78.6%. A break above that seeks to test the 1.63 from Nov. 2010.
Will the GBP/USD continue higher after the current correction? We would love to hear what you think.
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Fan Yang CMT
Chief Technical Strategist