Forex Technical Update
GBP/USD Chart 4H 6/8/2012 10:15AM EDT
The GBP/USD retreated from the 1.56 level after Bernanke gave no hint of QE.
It is now just above 1.54, during the 6/8 US session. This is a pivot, a psychological handle, and also a rising short-term trendline formed by last Friday through this week's price action (June). You can also say that this trendline is a flag pattern support.
A bounce from 1.54 keeps a subtle short-term bullish bias, as the 4H RSI reading had almost tagged 70 and then would have failed to break below 40.
A return above 1.55 opens back the 1.56 high.
So far June has been a correction against May, and if 1.54 does not hold, the GBP/USD would signal bearish continuation.
Be careful though, even if the market does break below 1.54. This completes one correction pattern. Sometimes after a long slide (like in May), we can consolidate further especially with momentum no longer in persistent bearish mode.
One scenario is that the dip below 1.54 will then be followed by another correction pattern.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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