Written By : ForexAbode.com || Sunday, 03 February 2013 00:00 GMT

GBP/USD Weekly Outlook - Feb 03, 2013

British Pound - US Dollar (GBP/USD) moved the way we had indicated during last weekend. The currency pair went down as low as 1.5674 which was 16 pips below the mentioned 1.5690. The currency pair jumped very strongly from there and went as high as 1.5878 but fell equally strongly to the low of 1.5690 before closing for the week bearishly at 1.5692.
As mentioned during last weekend, following points indicate that the bearish sentiments are holding and further downward moves cannot be ignored:
1) The recent pattern of resistance near 5-day EMA (the green EMA line in the daily chart above) continues. The upward jump of last week had broken that pattern but a strong resistance came at 22-day EMA (yellow line in the chart) and price fell below 5-day EMA again.
2) GBP/USD had broken below the key support level of 200-day EMA. Please check this GBP/USD alert to check on this.
3) The neckline support of an approximate double top chart pattern was also broken. This double top pattern had emerged with the first peak at 1.6309 on September 21, 2012 and second peak at 1.6381 on January 1, 2013. This pattern is also clear in the daily chart shown in the above mentioned alert.
4) Slight break of the support of the 61.8% retracement of the upward gains from 1.5269 of June 1st 2012 to the recent 1.6381.
While mentioning the above we need to note that the price action is still within the converging mid-term price channel.
To check on the above points please also look at this GBP/USD update which also mentions the important support levels and other facts about the price action. Any decisive break below the recent 1.5674 will indicate that the above mentioned support of 61.8% retracement is broken. Such a break should bring further downward move towards the support zone of 1.5550/1.5600. Any break below 1.5600 will be the first sign of the break of the above mentioned price channel and a break below 1.5550 will come as a better confirmation of the same. As mentioned in the above mentioned GBP/USD update, the support of the next retracement level at 1.5430 is also just below this. Such a move is expected to bring much deeper moves if 1.5500 psychological support also fails to hold. On the downside below 1.5500 we would expect a decline towards 1.5350.
On the upside first support is expected near the current 22-day EMA i.e. near 1.5855 and then near the recent resistance at 1.5878. Any break above 1.5878 should bring further upward consolidation towards the 200-day moving average resistance near 1.5960/1.5990. Till this resistance holds good deeper decline will be expected.

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