Is GBP/USD Near The Peak Of The Upward Jump – Two Observations
June 11, 2013 12:10 am GMT+0 in Chart Alert
GBP/USD had fallen very strongly since the beginning of 2013 to March second week. The fall had taken the currency pair from 1.6381 to 1.4831 i.e. 1550 pips. The rise from that low was strong and after some resistance near 38.2% retracement of that fall, the pair had managed to break over it. The upward gains took it to 1.5606. The interesting point here is that 1.5606 is the exact 50% retracement of the move from 1.6381 to 1.4831. A strong resistance was faced at this level for 2 weeks during end of April and 1st week of May 2013. The failure had a strong fall. The second rise from the recent bottom of 1.5008 tried to break this resistance of 50% retracement during last to last week but failed. This week again the pair is struggling against the same resistance. It is a wait and watch situation to see if GBP/USD fails near this level again.
Observation 1 – GBP/USD and the resistance of 50% retracement level
Another interesting observation
The above mentioned resistance is not the only one to be careful about. Since the beginning of September 2009 to mid-February 2013 i.e. for almost three and a half years the price action of GBPUSD had been inside a slightly ascending triangle. During February 2013 the pair had broken below the support trend line very strongly. This break after such a long time had fueled the bearish sentiments.
GBP/USD and the trend lines
The interesting point is that now this previous support trend line seems to have turned into a resistance trend line. The previous upward jump had found resistance just below this line during April last week and May first week of 2013. And now the recent upward move is again finding resistance near the same trend line. If this resistance holds then another bigger fall can not be ignored. However a break of this resistance may see GBP/USD to test the previous resistance line by moving towards 1.6300 or higher.
You may like to see the weekly outlook for GBP/USD also.