By Russell Glaser – Examining the GBP/USD from different time frames shows a shift in the long term trend to the downside.
The weekly chart shows an uptrend that was capped close to 1.5960, close to the 61.8% Fibonacci retracement level from the 2009 August high to this year’s low in May. A bearish engulfing pattern from the previous week’s trading hints at further bearish movement in the pair. A tweezers top reversal also is apparent as the heights of the candlesticks differ only by 2 pips.
The rising trend line looks to be nullified if the GBP/USD will close below the trend line this week. This week’s high price reached as far as the trend line at 1.5700 where the price promptly fell. This resistance coincides with the low from October when the pair was caught in a range trading environment prior to the previous bearish trend.
Moving onto the daily chart, further signals appear hinting at a shift in the long term trend of the GBP/USD. For the last two days the pair has breached and closed below the rising trend line, signaling a shift in the direction of the trend. The 20-day exponential moving average has also turned to the downside, another sign that the trend is reversing from an uptrend to a downtrend.
Support levels are found at yesterday’s low for the day at 1.5500 (S1) followed by the 200-day exponential moving average line at 1.5390 (S2).
Resistance levels come in at this week’s high of 1.5700(R1) and the 61.8% Fibonacci retracement level at 1.5960 (R2).
Forex Market Analysis provided by ForexYard.
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