GBP/USD Daily chart 1/22/2013 2:30PM EST
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50% retracement: GBP/USD continued to slide after breaking below a rising trendline as noted in the previous GBP/USD update. Since the break last Friday, cable has edged lower until it hit 50% retracement of the 1.5267-1.6380 bull run from June 1 to Jan. 2. Not only is this 50% of the half-year run, but also somewhat in the middle of a range that cable has been trapped in since the middle of 2009. (Check your weekly charts to confirm this general statement of non-direction in the long-term).
Double Top? There is a semblance of a double top being formed here. However, I don’t really like to call this a topping formation because it took the entire upper half of a range since 2011. Breaking below 1.58 could be a sign of some short-term bearish outlook, but since we are in an overall range-bound market, the further away from this “center” the more likely it will come back towards it. Therefore, This is a case, where if you find a bullish divergence in the daily RSI, it could be worth considering bullish outlooks toward the 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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