GBP/USD 1H Chart 9/19 /2012 7:15AM EDT
Corrective moves: The theme for USD-crosses so far this week has been correction against the risk-on, QE-anticipation moves (weakening the USD) since late July that propped up the euro, sterling (GBP), aussie (AUD), kiwi (NZD) and loonie (CAD). The GBP/USD is held under the 1.63 2012-high, but has remained resilient the past couple of sessions (9/17, 9/18), consolidating in a sideways to even bullish manner while other crosses have already developed swings in their correction.
Topping: As we can see in the 1H chart, the GBP/USD is finally joining the party during the 9/19 European session, falling from a topping formation (could be a double top), and pulling the RSI reading below 40 (reflecting loss of bullish momentum). As we gear up for the US session, the pair sits right on top of the 1.62 handle.
Pullback: If we get a pullback, watch for the topping formation’s central pivot area 1.6235. Holding below 1.6230 would be a clear sign of respect for the top and suggest further correction. Otherwise, if a rally pushes back above 1.6240, we might have completed the correction, and the focus is back on the current 1.6270 high to the 1.63 handle.
Further correction: The scenario for further bearish correction has “legs” if the RSI dips below 30 after price clears 1.62. The next couple of possible pivot levels are 1.6165 and 1.6065. But I think this correction has a chance to fall toward a rising channel seen in the daily chart, which could very well be coincident with the 1.6065 pivot if the GBP/USD does not fall sharply in this bearish correction scenario.
GBP/USD Daily Chart 9/19/2012 7:20PM EDT
Fan Yang CMT is a trader, educator and a 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.