Forex Strategy: GBP/USD Eyes 2014 Highs Near 1.6770 As Bears Retreat
- GBP/USD Technical Strategy: sidelines preferred
- Break above key resistance levels puts 2014 highs in sight
- Absence of key reversal pattern indicates bears in retreat
GBP/USD has staged an exceptional about-face in recent trading. After edging above the key 1.6600 handle the Pound bulls have taken charge of prices and look to be making a run on 1.6750. The staggering bounce for the pair has likely caught the bears off-guard given it was not preceded by a key reversal pattern. Sellers are likely sitting near the 2014 highs at the 1.6770 mark which may act to slow the pair’s advance.
GBP/USD: Bulls Take Charge
Daily Chart - Created Using FXCM Marketscope 2.0
Examining intraday price action using the four hour chart below; signs of hesitation from the bears were indicated by the emergence of several Doji formations near support at 1.6568/70. With prices powering through prior intraday resistance and a bearish signal missing, the pair may be set for continued gains.
GBP/USD: Dojis Signal Retreat By 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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