Forex Technical Update
GBP/USD has a range established and respected through Nov and Dec of 2011. The market ended the year breaking the support at 1.5420, and reached 1.5362. However, there was no follow-though, and a strong pullback is invalidating the break, actually suggesting strength. The 4H RSI reading is breaking above 60, a sign of lost bearish momentum. Price is also pushing above the mid-point of the range, reflecting strength. Now, a break above the projected resistance seen in the 4H cart seems to be the last threshold before heading back to the 1.5770 range resistance., or at least to 1.5750, the declining triangle resistance seen in the daily chart.
The daily chart shows a sideways market, with bearish bias. If the market does indeed get to 1.5750-1.5770 area, expect resistance. Resumption of the bearish mode continues to target the 1.5315 pivot, which is key before opening up further downside outlook. A break below 1.53 could open up 1.50 and a previous pivot at 1.4788.
However, a break above 1.5770 opens up the 200day SMA near 1.6050 up to 1.61 area. A break above 1.61-1.6110 area in January would be a major bullish signal, or at least one that eliminates the bearish bias, and opens up highs near 1.65-1.6550.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources