Previous: GBP/USD’s Bearish Momentum (11/20)
GBP/USD 4H Chart 11/22/2012 8:15AM EDT
Channel, fibonacci retracement targets: The 4H chart shows cable rallying in a small short-term channel from the 1.5826 low. In a higher degree, this could be just a flag pattern. In any case, the rally has pushed the 4H RSI above 60, showing lost of bearish momentum. Above the 1.5960, 38.2% retracement level (of the November downswing), GBP/USD has 1.60, 50% retracement as the next near-term target, with 61.8% retracement at 1.6041. The market would have turned from bearish to sideways, and the bullish outlook is still shelved until a break above 1.61 as it clears a declining trendline and 78.6% retracement level.
Downside risk: Back to the downside, if the market holds below 50%, 1.60 for example, that would be a sign bears are still in charge, and a fall below 1.59 would further give weight to a bearish continuation scenario (and establish this channel as a flag pattern), first with 1.5826 low in sight, then the 1.5780-1.58 area.
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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