GBP/USD Near The Failure Line ?

October 19, 2013 in Chart Alert

Recently GBP/USD has been indicating a bullish outlook all through. However the upward moves which had started from the low of 1.4813 has clearly lost the momentum.

Though it may seem to be repetition of what we have been saying for past some months but it is always better to repeat and remember than to miss the caution. For past 4 years the support and resistance trend lines have been in place for the currency pair.

GBP/USD weekly chart with trend lines

GBP/USD and trend lines

Once when the support line had failed, the same line had turned into resistance. The recent price action has been now below the original resistance line. As evident from the above chart, the resistance has clearly been working.

What else apart from the trend lines?

If, for one moment, we forget the caution presented by the mentioned trend line, we do have other factors which are against the continuance of the bullish outlook.

From April 2012 to till date, the pair had failed 3 times miserably in the range of 1.6301 to 1.6309.

GBP/USD and the failure zone

GBP/USD - expected resistances

On one occasion when the pair had managed to break this resistance of 1.6101 to 1.6109 zone, it had just managed to gain 72 pips more to fail at 1.6381.

What to expect?

Well, the above factors clearly indicate that GBP/USD is up against some quite strong restrictive pressures technically. Or we should say price action analysis wise? A caution is required at the current price action level below 1.6309 and even if a break over 1.6309 takes place, we need to keep the bullish outlook in check till any break over 1.6381 does not take place. Any failure against the mentioned resistances and a break below the recent 1.5894 should open the doors for the 38.2% retracement of the move from 1.4813 to 1.6260 i.e. 1.5706.

Do leave your comments in the comment box below this post to share your opinions.

Comments are closed.