GBP/USD enters the zone of strong supports
December 18, 2013 in Chart Alert
You may be getting bored that for many months we have been talking about the same resistance and support trend lines for GBP/USD. But then, if we have been talking about the same lines for long, those same lines have been in the existence for over 4 years. So can’t help. You may like to check one of the previous updates about the same at “GBP/USD broke 4 year old resistance trend line” before we move ahead with this GBP/USD chart alert.
As we had mentioned in the previous post, the pair had broken over the long-term resistance trend line when it had broken over 1.6260. As was expected, the break form the containment had brough further upward gains. GBP/USD had moved as high as 1.6467. The resistance there was a natural phenomena because of the strong psychological pressure of 1.6500 level. Well, the resistance had worked and the pair had moved down to as low as 1.6217 for a consolidation.
What is expected is that the old resistance support line should act as support now.
GBP/USD weekly chart with the trend lines
As evident from the above chart, the pair is acting as expected. The old resistance trend line is now acting as support.
What adds to this support zone is the support from the 55-day EMA. Let’s have a look on the daily chart:
What is expected?
The combined forces of these two support forces may keep the pair in check. As we have been mentioning the our “FX Daily Dose” section that sooner or later we expect GBP/USD to overcome the psychological resistance of 1.6500, however if the current support breaks and a move below 1.6200 takes place then further consolidation towards the next support zone of 1.6125 to 1.6140 can not be ruled out. Even if the fall extends, we would expect it to be limited to 1.6160/1.6180 zone where the strong support of the lower trend line would come into the picture.
If the current support holds then the pair should reverse back towards upside.
Do share your opinions to take this discussion forward.