GBP/USD poised for further potential breakdown
James Chen December 4, 2014 2:06 PM
<p>GBP/USD (daily chart shown below) continues to be weighed down in the face of renewed US dollar strengthening against major global currencies, and appears to […]</p>
GBP/USD (daily chart shown below) continues to be weighed down in the face of renewed US dollar strengthening against major global currencies, and appears to be poised for a further breakdown.
Currently nearing the one-year low of 1.5584 that was just established earlier in the week, GBP/USD is firmly entrenched within a strong downtrend that has been in place for more than four months since the 1.7190 multi-year high in mid-July.
The sharp drop since July, which represents more than a 9% decline down to this week’s noted 1.5584 one-year low, has consistently traded underneath a well-defined downtrend resistance line as well the 50-day moving average.
Having recently consolidated in a bearish flag pattern, the currency pair has since made a slight break below that pattern, tentatively confirming a continuation of the current downtrend.
GBP/USD continues to trade with a strong bearish bias. Any further breakdown below the noted 1.5584 low would confirm a further continuation of the entrenched downtrend, with downside targets residing around 1.5400 and then 1.5250.
Any upside rebound in the near-term should be met by strong resistance around the key 1.5750 level and the noted downtrend resistance line.
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.