Forex Technical Update

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GBP/USD 4H Chart 8/23/2012 7:55AM EDT

The GBP/USD accelerated after the FOMC minutes as we can see in the 4H chart. It has rallied sharply above a rising wedge resistance and just above a larger channel resistance. As the 8/23 US trading gets underway, the GBP/USD is holding below the 1.59 psychological handle and 61.8% retracement of the 1.63-1.5275 bear swing seen in the daily chart.

Like EUR/USD, the GBP/USD pair is slightly overbought in the very short-term based on the RSI, and price tagging the upper bollinger band (which is 3 standard deviations from the SMA here). Before we focus higher, the market may be in a near-term correction with an intra-session pivot at about1.5820 in sight.

After a corrective cycle in the near-term, the focus might be back to the upside, with 1.5930/35 as a resistance pivot to look for during the rest of the 8/23 session. If the rally does extend, look for deceleration and consider a possible Friday sell-off especially if 1H and 4H charts show overbought conditions and exhaustion (bearish divergence)

GBP/USD Daily Chart 8/23/2012 8:03AM EDT
Fan Yang CMT is a trader, educator and a Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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