GBP/USD hits nine-month low and continues plummet

<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.

 

GBPUSD technical chart 08.09.14

 

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.

 

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.