GBP/USD hits nine-month low and continues plummet
James Chen September 8, 2014 6:00 PM
<p>GBP/USD (daily chart shown below) has continued its extreme plummet after gapping down below previous major support around the 1.6300 level. In the process, the […]</p>
GBP/USD (daily chart shown below) has continued its extreme plummet after gapping down below previous major support around the 1.6300 level. In the process, the currency pair has established a new nine-month low and a new low for 2014.
The steep decline of the past two months that signaled the potential beginnings of a new bearish trend began in earnest after the retreat from the mid-July multi-year high of 1.7190.
This two-month decline has broken down below several major support levels, including 1.7000, 1.6700, 1.6500, and most recently, the noted 1.6300 level, a major historical support and resistance level. In the process of this plunge, price action has also broken down swiftly below both the key 50-day and 200-day moving averages.
The 50-day moving average has also declined sharply to begin converging with the 200-day moving average, a major bearish indication. A cross of the 50-day below the 200-day could soon occur, a condition that has not occurred since February of 2013.
Having just broken down sharply below the noted 1.6300 prior support level, GBP/USD’s bearish momentum has been significantly extended. The next major downside support target resides around the key 1.6000 psychological support level, followed closely to the downside by the 1.5900 and then 1.5750 support targets.
Near-term upside resistance now resides tentatively around the broken 1.6300 level.
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