GBP/USD rebounds within strong bearish trend
James Chen September 24, 2014 7:14 PM
<p>GBP/USD (daily chart shown below) has rebounded significantly after hitting nearly a ten-month low of 1.6050 two weeks ago. The rebound attempted a breach of […]</p>
GBP/USD (daily chart shown below) has rebounded significantly after hitting nearly a ten-month low of 1.6050 two weeks ago.
The rebound attempted a breach of the 1.6500 resistance area last week, but was unable to hold above that level before quickly retreating.
Despite the current rebound, the trend bias for GBP/USD remains strongly bearish in line with the new downtrend that began in earnest after the retreat from the mid-July multi-year high of 1.7190.
Lending to this bearish bias is the fact that the 50-day moving average has recently crossed decisively below the 200-day moving average, a major bearish technical event that has not occurred since February of 2013.
If the currency pair is able to re-break below the key 1.6300 level, this bearish bias will have been further strengthened. In that event, GBP/USD should once again target the 1.6000 psychological support level, which it came just short of hitting two weeks ago. Any break below 1.6000 should be followed further to the downside by the 1.5900 and then 1.5750 support targets.
To the upside, major resistance continues to reside around the noted 1.6500 area.
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