GBP/USD 4H chart 3/29/2013 10:00AM EDT
Trendline breakout: The GBP/USD as been bullish in March. After initially retreating 38.2% from a falling trendline that has held 2013 price action bearish, it has now cracked it. The break also cleared the 200-4H SMA. If the market can clearly push above 1.52, and pull the 4H RSI reading above 60, it should reflect continuation of the March rally.
Breakout, correction scenario: The daily chart shows that the break is still premature. But if it does develop, there is a near-term resistance pivot at 1.5320. Then the next possible target would be the 38.2% retracement at 1.5422. Further confirmation of bottoming, like respecting the 1.52 area as support, could signal further correction, with room toward 1.56/1.5605, 50% retracement.
Momentum: Looking at the daily chart, one should also anticipate possible resistance when the RSI gets to 60. If the overall 2013 bearish momentum is to hold after the current bullish correction, then the RSI reading should hold at 60 and turn down. Sometimes, the market will be uncertain at that point and even if there is no bearish continuation, we might see some resistance in the very short-term once the relief rally gets to 38.2% retracement if the daily RSI is also at 60.
GBP/USD Daily chart 3/29/2013 10:05PM 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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