Forex Technical Update
The GBP/USD was rejected from going above the 1.60 handle, and fell sharply during the 3/2 trading session. To start this week, the market is trading just above a key support cluster. The daily chart shows the market about to test the rising trendline going back to the low in January. There has also been a reaction seen at 1.5784, 61.8% retracement of the latest swing from 1.5653 to 1.5995. This support area was also the resistance pivot from the consolidation period between 11/30/2011 and 12/21/2011.
In the 1H chart we see a bit of a pullback after the RSI established bearish momentum and showing oversold conditions. If we see the market successfully push back above the 200 simple moving average here, that would be a first sign against the bearish outlook, but certainly does not shelve it. 1.59 will be a key resistance while the 60 reading in the 1H RSI will also be significant resistance. A break above this Opens back 1.60 and 1.61 target. Failure to break above 1.59, and failure of RSI reading breaking above 60 and falling back below 40 could be a sign of bearish continuation. Breaking below 1.5750 will first open up the next support pivot near 1.5650. This would shelve the bullish outlook.
Fan Yang CMT is a forex trader, analyst, educator nd main contributor for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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