Talking Points
- GBP/USD Technical Strategy: sidelines preferred
- Break above key resistance levels puts 2014 highs in sight
- Dojis in intraday trade suggest hesitation by the bulls
GBP/USD is giving back some ground after staging an exceptional run towards its 2014 highs near 1.6770 in recent trading. While the bulls are taking a bit of a breather, a bearish reversal signal that could warn of a potential correction is yet to emerge.
GBP/USD: Bulls Make A Run on 1.6770
Daily Chart – Created Using FXCM Marketscope 2.0
Examining intraday price action using the four hour chart below; signs of hesitation by the bulls are evident with several Doji formations near resistance at 1.6750. If a correction takes place, expect some buying support to emerge near the 1.6680 mark.
GBP/USD: Dojis Signal Hesitation By The Bulls
4 Hour Chart – Created Using FXCM Marketscope 2.0
The ominous Dark Cloud Cover formation on the weekly at multi-year resistance also remains on the radar, and is threatening a more significant correction ahead for the Pound. A potential target is offered by the 23.6% Fib Retracement Level near 1.6350. However, a Piercing Line pattern has also recently emerged and although it awaits confirmation, it suggests the bulls haven’t given up on the pair just yet.
GBP/USD: Bulls Return As Piercing Line Forms on Weekly
Weekly Chart – Created Using FXCM Marketscope 2.0
By David de Ferranti, Market Analyst, FXCM
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