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GBP/USD 4H Chart 11/22/2012 8:15AM EDT

GBP/USD 11/22/2012 4H chart

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.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

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