Forex Technical Update
The GBP/USD has broken below the 1.5950 support pivot and is now treating this level as resistance. It has also cracked consolidation low, but has not been able to sustain the break. Instead, it is hovering above this cracked consolidation support. Note the expansion of volatility followed by contraction, which reflects some exhaustion to the downside. The bearish outlook is contained.
The 4H chart shows that the RSI reading is still hovering above 40, so the bullish momentum from the October rally has not been lost. A clean break below 1.5880 should also take the RSI reading below 40, at which moment we would have topping signal from what appears to be a double top (although the first top is a tad higher). The 38.2% retracement level is immediate support below the top, reinforced by pivots back in October.
A break back above 1.5950 will reflect failure for topping. Then a return above 1.60 suggests continuation of range-bound market, and with short-term bullish intent, opens up the consolidation high near 1.6130.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources