Forex Technical Update
- The GBP/USD rallied from 1.6260 to 1.6340 before finding resistance just ahead of the US session.
- A strong push to the downside then engulfed all the correction rally candles from the Asian-Early-European sessions.
- This suggests bearish continuation. The market's ability to stay away from the previous consolidation zone just above, and the ability to push sharply downwards maintains the bearish momentum in the short-term.
- The 1H chart shows a negative reversal signal, which targets 1.6205 in the very short-term. (A negative reversal is when there is a higher RSI high but a lower corresponding price high.)
- If we can get to 1.62, we are breaking below a rising trendline seen in the daily chart, and opening the August low of 1.6110 in the short-term, then the 1.60 pivot area.
- On the other hand, If the reaction to Bernanke's statement today brings the market above 1.6350, we may see a rally towards 1.6450 to attack the topping action set earlier in the week.
- We may need to break above 1.6530, near the middle of the previous topping pattern, before re-establishing the bullish mode. Below that, we are more likely to be in a bull-trap.
Fan Yang CMT
Chief Technical Strategist