Forex Technical Update
Besides a brief crack of the 1.5425 November low, the GBP/USD stayed above 1.54 and is now rally from this 1.54-1.5425 support area. The RSI in the 4H chart did not tag 30, reflecting weak bearish momentum, although we know the market is trading below the 200 period simple moving average in both the 4H and 1H charts, so there is still bearish bias. But since the momentum is not there, allow for some choppiness and a significant correction before considering the downside. To the upside The next possible resistance is at the 1.5545 (38.2% retracement level). The 1.5560 is the support pivot established Dec. 6, and should be tested as resistance.
The 1H chart shows that we are in a 2nd upswing of a correction, possibly in an abc/zig-zag type of correction. The FE markets the fibonacci expansion of the first swing to the second. We see that we are at 100%. 161.8% near 1.5580 is a possible maximum for wave c. A bearish market should respect this 1.5580-1.56 level as resistance as it also represents the 200 hour SMA. A break above the 1.56 level takes away the bearish bias, especially if the RSI reading in the 1H chart climbs above 70.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources