Forex Strategy: GBP/USD Eyes 1.6600 Following Bullish Engulfing Pattern
- GBP/USD Technical Strategy: Sidelines preferred
- Former support-turned-resistance at 1.6600 may limit bounce
- Dark Cloud Cover on weekly warns of larger correction
The Pound has retraced some of its recent declines following the break below the range-bottom at 1.6600. However, the absence of a bullish reversal signal on the daily is notable, which suggests that the bulls may run out of steam as we head back towards the original breakout point.
GBP/USD: Retracement May Falter
Daily Chart - Created Using FXCM Marketscope 2.0
Drilling down to the four hour chart; a reversal signal is indicated by the Bullish Engulfing formation near support at 1.6460. A bearish pattern is lacking in intraday trade suggesting the potential for further gains in the session ahead with sellers likely to emerge at the 1.6568/70 mark.
GBP/USD: Bulls Move In After Reversal Pattern in Intraday Trade
4 Hour Chart - Created Using FXCM Marketscope 2.0
The ominous Dark Cloud Cover formation on the weekly at multi-year resistance also remains on the radar, and is threatening a more significant correction ahead for the Pound. A potential target is offered by the 23.6% Fib Retracement Level near 1.6350.
GBP/USD Weekly Continues To Offer Warning
Weekly Chart - Created Using FXCM Marketscope 2.0
By David de Ferranti, Market Analyst, FXCM
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