GBP/USD 1H chart 1/18/2013 7:05AM EST
Channel, momentum: GBP/USD is sliding within a falling channel as seen in the 1H chart. In this time-frame, the momentum is bearish as the RSI has tagged 30 and failed to push above 60 since it crossed below the 200SMA and has since remained under it.
Rising trendline breakdown: The daily chart shows a rising trendline going back to the 1.5267 low on June 1. As the market pushed below 1.5955, it pushed below this rising trendline as well as 38.2% retracement of the 1.5267-1.6380 bull stretch. This price dip also pulled the daily RSI reading below 40, a sign that bullish momentum is lost.
Target: Considering the possible extension of the current bearish move since the 1.6380 spike, we are now looking at the 50% retracement at 1.5823 as the next key support as it is also reinforced by the support pivot of the November low. As you can see, a break below this level would complete a double top in the daily chart, first opening up the 61.8% retracement at 1.5692.
Failure: At this point, during the 1/18 US session, a return back above 1.60 would make this breakout suspect, as well as a break above the channel resistance.
GBP/USD Daily chart 1/18/2013 7:11AM EST (click to view full size)
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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