Forex Technical Update
GBP/USD 4H Chart 7/16/2012 2:30PM EDT
The short squeeze today is pressuring the USD across the board, and the GBP/USD is trading up against a declining trendline connecting the 1.5780 high on 6/20 with the 1.5725 high on 7/2. The 4H chart shows the test of this trendline resistance as the market trades around 1.5650. Failure to break above 1.5650 through the upcoming 7/14 Asian session and a push back below 1.56 by the European session would maintain short-term bearish bias.
A hold above 1.5650 is likely to introduce some further upside risk to this pair this week. The daily chart shows a scenario toward 1.59-1.5910, a wave projection in confluence with 61.8% retracement of the 1.6305-1.5271 bear run during April and May 2012. This bullish scenario in the short-term is still within the context of a medium term bearish outlook.
IF this rally DOES materialize before Bernanke finishes his testimony in front of the US senate, consider a possible sell-the-news scenario because Bernanke tends to disappoint QE hopes. If the rally can continue and extend even beyond 1.5910 after Wednesday (7/18), then there is a chance this is more than just a squeeze, and we can expect upside risk toward 1.6150, or at least toward the declining trendline that goes back to April 2011.
GBP/USD Daily Chart 7/16/2012 2:35PM EDT
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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