GBP/USD Tentatively Breaks Down Longstanding Bullish Trend

GBP/USD (daily chart) as of Thursday (6/16/2011) has made a tentative breakdown below a key uptrend support line extending back to the May 2010 lows. This breakdown is a key bearish event that, if sustained, could mean a bearish trend change for the pair. This occurs after a general period of overall bearishness stemming from the establishment of the 1.6745 high back in late April. The immediate downside target on this breakdown continues to reside around the important 1.6000 psychological support/resistance level. In the event of a breakdown below 1.6000, which would confirm a bearish trend change, the key support target further to the downside resides around the 1.5750 price region. To the upside, resistance within the context of the current bearishness resides around the 1.6300 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

Charting the Majors with James Chen Rebroadcast

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GBP/USD Drops to Long-Term Trendline Support

GBP/USD (daily chart) as of Wednesday (6/15/2011) has dropped significantly down to hit a key long-term uptrend support line extending back to the May 2010 lows. This occurs after price action respected a short-term downtrend resistance line extending back to the late April high. Currently, bearish momentum is strong and has reached a critical juncture. A breakdown below the long-term trendline has a key downside target around the psychologically important 1.6000 support/resistance level. To the upside, the important 1.6300 price level should now act as key resistance within the context of the current bearishness.

(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 Drops to Approach Critical Support

GBP/USD (daily chart) as of Friday (6/10/2011) has dropped substantially to approach a confluence of key support factors, including the 1.6200 support price region, the 38.2% Fibonacci retracement of the last major bullish trend run, and an important long-term uptrend support line extending back to the May 2010 lows. Price action is therefore at a critical juncture once again. In the event of a significant breakdown below the current support confluence, which would jeopardize the longstanding bullish trend for GBP/USD, a key initial downside support target resides around the psychologically-important support/resistance level at 1.6000.

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

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

GBPUSD back below last Friday’s low to 1.6285

Through Thursday the GBPUSD was threatening to post the lowest week Low to High trading range since the June 10th, 2007 week (SEE POST FROM YESTERDAY).  The 4 year record was not meant to be broken this week and in the Far East session the price had extended the range.  The price was given an additional push lower on the back of weak Manufacturing data this morning, making a BOE rate hike less likely.

The pair did have a correction off the lows that has seen the pair extend to the 38.2% retracement at the 1.6311 level.  The level found sellers and the price is now back below the low from last Friday at 1.6284.  This will now be eyed as intraday resistance  (in addition to the 1.6311 level above).

On the downside, the 100 day MA comes in at the 1.6238 level today (see blue line in the chart below).  Below that is the 38.2% of the move up from the December 30th low at the 1.6209.  Earlier today on the sharp move lower, the GBPUSD fell to 1.6213 -4 pips short of the key 38.2% retracement level.  Profit takers  entered and forced the market to the retracement level above.

Needless to say a move below the 38.2% retracement at the 1.6209 level will be needed to push prices even lower. The next support level below the 1.6209 level would be the trendline off the Jan, March and May lows at the 1.6095 area. The focus to downside was helped by the bearish fundamental news. Next week the CPI is expected to come out. The BOE has already said that inflation of 5% is possible in 2011. The CPI is expecte to increase by 0.2% and the YoY is expected to remain at 4.5% (core is expected to dip to 3.5% from 3.7%).  With growth numbers lower, a low inflation reading (or bearable one) could undermine the GBPUSD going forward.  Watch technical levels for clues, however. Staying below the 1.6284 and 1.6311 level keeps the bias to the downside. 

The NY Opening Forex Commentary for June 7th

NY Evening Forex Commentary for June 6th 2011

The Midday Forex Commentary for June 6th 2011

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