British Pound vs US Dollar Breaks Below Key Support

<p>GBP/USD (daily chart) as of January 16, 2013 has tentatively broken below the key 1.6000 support level, establishing a seven-week low in the process. In […]</p>

GBP/USD (daily chart) as of January 16, 2013 has tentatively broken below the key 1.6000 support level, establishing a seven-week low in the process. In doing so, price has also broken down below a strong uptrend support line extending back to the June 2012 1.5266 low. This tentative breakdown below support may be considered an important price event, as the pair has been attempting and failing to close below the 1.6000 area for approximately the past two months. This occurs after price was equally unable to make a daily close above the key 1.6300 level within the past month, highlighting the pair’s inability to continue the entrenched uptrend after pivoting down off a clear shooting star candle around 1.6300 in the very beginning of January. In the event of a close below 1.6000 and continued downside momentum, which could indicate a possible trend change or interruption, price could move towards further potential support to the downside around the 1.5800-1.5825 price region.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.