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Forex Strategy: GBP/USD Dark Cloud Cover Suggests Dip To 1.6600

Forex Strategy: GBP/USD Dark Cloud Cover Suggests Dip To 1.6600

David de Ferranti, Currency Analyst

Talking Points

  • 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

Forex-Strategy-GBPUSD-Dark-Cloud-Cover-Suggests-Dip-To-1.6600_body_Picture_3.png, Forex Strategy: GBP/USD Dark Cloud Cover Suggests Dip To 1.6600

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

Forex-Strategy-GBPUSD-Dark-Cloud-Cover-Suggests-Dip-To-1.6600_body_Picture_2.png, Forex Strategy: GBP/USD Dark Cloud Cover Suggests Dip To 1.6600

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

Forex-Strategy-GBPUSD-Dark-Cloud-Cover-Suggests-Dip-To-1.6600_body_Picture_1.png, Forex Strategy: GBP/USD Dark Cloud Cover Suggests Dip To 1.6600

Weekly Chart - Created Using FXCM Marketscope 2.0

By David de Ferranti, Market Analyst, FXCM

Follow David on Twitter: @Davidde

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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