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GBP/USD Edges Out Fresh Multi-Year High With Bearish Signal Absent

GBP/USD Edges Out Fresh Multi-Year High With Bearish Signal Absent

David de Ferranti, Currency Analyst

Talking Points

  • GBP/USD Technical Strategy: Longs Preferred
  • Further gains possible in absence of bearish signal
  • Dojis on the daily and four hour charts hint at a bounce

As noted in yesterday’s candlesticks report, GBP/USD was poised for further gains following a Doji formation on the daily. The candlestick signaled a return of the bulls following a test of critical support near 1.6660/2. With a bearish reversal signal missing on the daily, the pair may be in store for further gains, with sellers likely to emerge at the November 2009 high near 1.6870.

GBP/USD: Set For Further Gains

GBPUSD-Edges-Out-Fresh-Multi-Year-High-With-Bearish-Signal-Absent_body_Picture_3.png, GBP/USD Edges Out Fresh Multi-Year High With Bearish Signal Absent

Daily Chart - Created Using FXCM Marketscope 2.0

Examining intraday price action using the four hour chart; the Dragonfly Doji near 1.6660/80 signaled a lack of conviction amongst bears to push prices lower. With the Pound now probing above the 1.6815 mark in early European trading with a bearish signal absent, further gains over the remainder of the week look possible.

GBP/USD: Dragonfly Doji Highlights Hesitation From The Bears

GBPUSD-Edges-Out-Fresh-Multi-Year-High-With-Bearish-Signal-Absent_body_Picture_2.png, GBP/USD Edges Out Fresh Multi-Year High With Bearish Signal Absent

4 Hour Chart - Created Using FXCM Marketscope 2.0

This week’s gains for the pound have acted to negate the Dark Cloud Cover formation that had appeared near multi-year resistance for GBP/USD. The rally has arisen following a Piercing Line pattern which signaled the bulls were returning to the Cable. 1.6770 remains a critical level of resistance for the GBP/USD, given it has failed to close above the mark since 2008.

GBP/USD: Bulls Return As Piercing Line Forms on Weekly

GBPUSD-Edges-Out-Fresh-Multi-Year-High-With-Bearish-Signal-Absent_body_Picture_1.png, GBP/USD Edges Out Fresh Multi-Year High With Bearish Signal Absent

Weekly Chart - Created Using FXCM Marketscope 2.0

By David de Ferranti, Market Analyst, FXCM

Follow David on Twitter: @Davidde

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