Forex Strategy: GBP/USD Eyes 1.6500 With Bullish Candle Lacking
- GBP/USD Technical Strategy: shorts preferred
- Break of 1.6600 opens declines to 1.6455
- Lack of reversal signal puts doubt on bounce
GBP/USD has extended its recent declines which follow on from a Doji candlestick near key resistance at 1.6660. With prices closing below the critical 1.6600 handle on the daily, an extended decline towards looks 1.6455 likely, with some interim support possible at the psychologically-significant level of 1.6500.
GBP/USD: Break of 1.6600 Opens Declines To 1.6455
Daily Chart - Created Using FXCM Marketscope 2.0
Examining intraday price action using the four hour chart below; signs of a bullish reversal are lacking, which casts doubt over the potential for a sustained recovery. However, the bears are also hesitant as indicated by several Doji formations near support at 1.6560/70.
GBP/USD: Dojis Signal Hesitation From The Bears
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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