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Forex Strategy: GBP/USD Facing Test of Critical 1.6600 Handle

Forex Strategy: GBP/USD Facing Test of Critical 1.6600 Handle

David de Ferranti, Currency Analyst

Talking Points

  • 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

Forex-Strategy-GBPUSD-Facing-Test-of-Critical-1.6600-Handle_body_Picture_3.png, Forex Strategy: GBP/USD Facing Test of Critical 1.6600 Handle

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

Forex-Strategy-GBPUSD-Facing-Test-of-Critical-1.6600-Handle_body_Picture_2.png, Forex Strategy: GBP/USD Facing Test of Critical 1.6600 Handle

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-Facing-Test-of-Critical-1.6600-Handle_body_Picture_1.png, Forex Strategy: GBP/USD Facing Test of Critical 1.6600 Handle

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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