Forex Strategy - GBP/USD Bullish Engulfing Pattern Hints At Bounce
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GBP/USD Technical Strategy: sidelines preferred
Range between 1.6610 and 1.6765 on 4 hour remains intact
Shooting Star warns on daily warning of declines
The GBP/USD four hour chart has posted a Bullish Engulfing candlestick formation which may be hinting at bounce for the pair in the session ahead. The pattern is made more noteworthy as it has appeared near the psychologically-significant 1.6600 level.
However, there appears to have been little upside momentum following the bullish reversal signal, as such a bounce may fizzle, particularly given resistance looms overhead near 1.6640 (the 23.6% Fib Retracement level).
Turning to the daily chart, a Shooting Star formation continues to warn of a drop for the Pound over the near-term. This comes in addition to a shift in the trend (signaled by the 20 SMA). A break below strong buying support at 1.6600 would be needed before looking at new short entries.
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4 Hour Chart - Created Using FXCM Marketscope 2.0
Daily Chart - Created Using FXCM Marketscope 2.0
Weekly Chart - Created Using FXCM Marketscope 2.0
--- Written by David de Ferranti, Market Analyst, FXCM
Contact and follow David on Twitter: @Davidde
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