Forex Strategy: GBP/USD Facing Test of Critical 1.6600 Handle
- GBP/USD Technical Strategy: Sidelines preferred
- Break of 1.6600 would suggest bearish bias
- Lack of reversal signal puts doubt on bounce
The 1.6660/70 mark has continued to gap gains for the Pound which follows on from a Doji formation on the daily that signaled hesitation amongst the bulls. While we’ve seen a dip in GBP/USD during early European trading today we need to see a break below support at 1.6600 before offering a bearish technical bias.
GBP/USD: Facing Test of Critical 1.6600 Level
Daily Chart - Created Using FXCM Marketscope 2.0
Examining intraday price action using the four hour chart below; there is evidence of some hesitation amongst sellers to push prices below 1.6600. However, signs of a bullish reversal remain absent at this stage, which puts a potential bounce in doubt.
GBP/USD: Bullish Signal Lacking Near Critical Support
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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