Price & Time: GBP/USD: Is this only getting started?
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- GBP/USD rebounds from long-term trendline
- 1.4475 And 1.4350 key near-term pivots
I wrote last week about a potential timing relationship in the pound. Time is a bit less finite than price so I like to give these things a little breathing room to materialize – usually 1 or 2 days extra. Using this extra bit of room, the pound did seem to respond to the measured move in time of the 2014 – 2015 decline, but thus far, the move higher has not been too inspiring.
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What intrigues me more is where GBP/USD reversed from as it came off a trendline extending back to the Plaza Accord low in 1985 (as pointed out HERE by my colleague Jamie Saettele on Tuesday). It is certainly an important enough support level to raise an eyebrow, but the burden of proof is still on the bulls here. The primary trend is clear and following last week’s close under the April low there is plenty of risk that this decline is only getting started. For this reason, I would probably need to see a daily settlement over yesterday’s high before the end of the week to get excited about the prospects of any sort of tradeable turn higher. Weakness under 1.4350 would obviously invalidate both the trendline and the positive timing from earlier in the week, but there is a lot of potential support just under 1.4300 (78.6% retracement of 2009 – 2014 advance, 61.8% projection of 2014 – 2015 decline, bottom of 1-year standard deviation channel). Traction below there is probably needed to set off a more aggressive decline.
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com