Forex Strategy: GBP/USD Dark Cloud Cover Suggests Dip To 1.6600
- GBP/USD Technical Strategy: Sidelines preferred
- Dark Cloud Cover suggests test of 1.6600 possible in session ahead
- Daily remains void of bearish reversal pattern
GBP/USD has closed the gap left over the weekend during Asian trading today as the pair retreats back towards key support at the 1.6600 handle. However, the absence of a bearish reversal candlestick pattern on the daily raises doubt about the potential for a more significant correction.
GBP/USD: Bearish Reversal Signal Lacking
Daily Chart - Created Using FXCM Marketscope 2.0
Drilling down to the four hour chart; a Dark Cloud Cover pattern suggests notable selling pressure around the 1.6650 mark and the potential for another test of the 1.6600 handle.
GBP/USD: Selling Pressure Near 1.6650 Caps Gains As Dark Cloud Cover Forms
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. However, a Piercing Line pattern has also recently emerged and although it awaits confirmation, it suggests the bulls haven’t given up on the pair just yet.
GBP/USD: Bulls Return As Piercing Line Forms on Weekly
Weekly Chart - Created Using FXCM Marketscope 2.0
By David de Ferranti, Market Analyst, FXCM
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.