GBP/USD Continues Dramatic Plummet

GBP/USD (daily chart) as of Thursday (9/22/2011) has continued its dramatic plummet since Wednesday, extending the sharp bearish trend that has been in place since the mid-August 1.6616 high. The current drop has brought price down to hit and dip under key support in the important 1.5350 price region. The steepness of this bearishness should soon prompt some corrective price action in the form of a pullback, but the overall directional bias continues to be to the downside in line with the strong existing downtrend. Upside resistance on this potential pullback resides around the key 1.5500 price region. Further bearish price action within the context of the current downtrend should target the 1.5200 price region (which is also the 61.8% Fibonacci retracement of the major May 2010 to May 2011 uptrend), followed by the psychologically-important 1.5000 price region.

(Click on chart to enlarge. Forex chart key: price on 1st pane, Stochastics 14,3,3 on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average (SMA) in orange; 100-period SMA in brown; 200-period SMA in dark blue; Fibonacci levels in magenta.)

James Chen, CTA, CMT
Director of Technical Research and Education
FXDD

GBP/USD Bearishness Targeting 1.55 Downside to Further Downtrend

GBP/USD (daily chart) as of Monday (9/19/2011) has continued its dramatic overall bearishness of the last several weeks by making a significant breakdown below key 1.5750 area support. This breakdown caps off a full month of steeply bearish price action coming off the mid-August 1.6616 high. Now that a breakdown below the 1.5750 support region has been made, the next major support target to the downside resides around the 1.5500 price region, which represents the 50% retracement of the long-term previous uptrend running from the May 2010 1.4230 low to the April 2011 1.6745 high. The trend on GBP/USD is now bearish, and further downside should be seen. Within the context of this new bearish trend, upside resistance resides around the key 1.6000 psychological price region.

(Click on chart to enlarge. Forex chart key: price on 1st pane, Stochastics 14,3,3 on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average (SMA) in orange; 100-period SMA in brown; 200-period SMA in dark blue; Fibonacci levels in magenta.)

James Chen, CTA, CMT
Director of Technical Research and Education
FXDD

GBPUSD keeps bullish bias but momentum fades a touch

GBP/USD Leans Toward Further Overall Decline Despite Rebound

GBP/USD (daily chart) as of Tuesday (7/12/2011) has dropped down to hit a key 38.2% Fibonacci retracement (of the May 2010 lows to the May 2011 highs) and also approached its 1.5750 downside support target, before making a significant rebound. This occurs after a couple of weeks of sideways consolidation around 1.6000 that followed on the heels of a bullish trendline breakdown that effectively ended the year-long uptrend. The overall directional bias on GBP/USD continues to be to the downside. In the event that the noted 38.2% retracement and the noted 1.5750 area support are subsequently broken strongly to the downside, the clear near-term support target to the downside resides around the 1.5500 price region, which is not only a strong prior support/resistance level, but also the 50% Fibonacci retracement of the same May 2010 – May 2011 uptrend.

(Click on chart to enlarge. Forex chart key: price on 1st pane, Stochastics 14,3,3 on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average (SMA) in orange; 100-period SMA in brown; 200-period SMA in dark blue; Fibonacci levels in magenta.)

James Chen, CTA, CMT
Director of Technical Research and Education
FXDD

GBP/USD Breaks Down, Targets Further Downside

GBP/USD (daily chart) as of Thursday (6/23/2011) has made a swift and strong breakdown below multiple support levels, indicating a potential trend change for the pair after confirming a breakdown of the longstanding bullish support trendline that was in place since the May 2010 lows, more than one year ago. The initial target on this breakdown resided around the key 1.6000 psychological support/resistance region, but price action has gone on tentatively to drop below this important level. The directional bias on GBP/USD, therefore, continues to be bearish with a key further downside support target around the 1.5750 price region.

(Click on chart to enlarge. Forex chart key: price on 1st pane, Stochastics 14,3,3 on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average (SMA) in orange; 100-period SMA in brown; 200-period SMA in dark blue; Fibonacci levels in magenta.)

James Chen, CTA, CMT
Director of Technical Research and Education
FXDD

Webinar Rebroadcast: Charting the Majors with James Chen

Please click on the following link to access the rebroadcast of today’s Charting the Majors with James Chen: https://www1.gotomeeting.com/register/465572601 .

GBPUSD falls below the 100 bar MA and 38.2% retracement

The GBPUSD continued the decline after testing and holding resistance on the hourly chart at the 1.6218 level (see PRIOR POST).   The selling continued for the pair through the 100 bar MA on the 5 minute chart and the 38.2% retracement of the move up from the low today. The fall below the level should have solicited selling interest – and it did – but the fall was short lived and market bounced back higher (see 5 minute chart below).

Now with support broken and failing (on 5 minute chart) and resistance also broken and failing (on hourly chart), the pair should have a bullish bias but resistance above might find willing sellers anyway until a clearer trading picture emerges. The 100 hour MA is close by at the 1.6206 now.  That will be a first test for the bulls.  A break above will next target the 38.2% at the 1.6217 level.

GBPUSD fails on break above resistance

The GBPUSD rallied strongly off the low trendline support in the early London session, and moved above key resistance at the 1.6212-17 level. This break higher should have solicited additional buying interest in the pair. However, the break was quickly rejected and the price is now back below the key level.

This failed break should now solicit selling against the level with risk defined against the 1.6212-17 area.  If the price moves back above this resistance area, the shorts will likely cover quickly. However the quick sell off on the break and the number of reasons for resistance at the area, should give pause to the bulls for the time being at least and a rotation back lower.

On the downside watch the 100 bar MA on the 5 minute chart for initial support at 1.6180

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