Forex Strategy: GBP/USD May Dip As Bulls Hit Brick Wall Near 1.6600
- 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
As noted in yesterday’s candlesticks report the Pound was likely to make a run at the key 1.6600 handle. Given that conviction was not strong enough amongst traders to force the currency to close above the critical resistance level, further gains may be limited. The appearance of a bearish reversal pattern would suggest a quick retracement back towards the 1.6455/60 mark.
GBP/USD: Bounce Encounters Brick Wall
Daily Chart - Created Using FXCM Marketscope 2.0
Drilling down to the four hour chart; the Dojis in intraday trade denote deliberation amongst the bulls as the Pound trades shy of the key 1.6600 handle. A move back below resistance-turned-support at 1.6568 would likely open up a dip back to the 1.6460 mark.
GBP/USD: Bulls Lose Steam As Dojis Descend
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 Warns of Weakness
Weekly Chart - Created Using FXCM Marketscope 2.0
Key Fundamental Event Risk Ahead: Note that upcoming UK economic data may cause price action that negates the technical bias offered above.
By David de Ferranti, Market Analyst, FXCM
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