GBPUSD Finds Support at Key 38.2% Fib, Higher Now then Lower Again
Chart prepared by Christopher Vecchio using Marketscope 2.0
FOREX Analysis: The GBPUSD has found key support at 1.5400/30 (38.2% Fib January high to March low [blue line], 38.2% Fib March low to May high [red line]), and with short-term (H1, H4) Slow Stochastics (5,3,3) turning higher, there is reason to believe that the path may be higher first before lower in a few days. Overall, the pair is trading back to support in an ascending channel off of the March 12 and May 29 lows; a test of 1.5100 is called for over the coming weeks.
FOREX Trading Strategy: Further US Dollar strength is contingent upon sentiment remaining that the Fed will taper QE3, and the more evidence that builds on the fundamental side, the greater the probability that the ascending channel that has guided price the past three months is only a Bear Flag. Big picture: the GBPUSD broke the uptrend off of the 2009, 2010, and 2012 lows, signaling the beginning of a greater selloff towards 1.4200. Any rallies in the pair look to be sold; price could climb to 1.5530/35 (23.6% Fib March low to May high [red line]) before the next leg lower begins.
--- Written by Christopher Vecchio, Currency Analyst
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