As noted in yesterday’s candlesticks report the 1.6660 mark was likely to prompt buyers to emerge. With a Doji now having formed on the daily, it looks like the bulls have once again taken control of prices. A push back towards the 2014 highs near 1.6820 may be on the cards, given the absence of a bearish reversal signal on both the daily and four hour timeframes.
GBP/USD: Bulls Return Near Key Support
Daily Chart - Created Using FXCM Marketscope 2.0
Examining intraday price action using the four hour chart; the Dragonfly Doji near 1.6660/80 signaled a lack of conviction amongst bears to push prices lower. With the Pound now probing above the 1.6750 mark in early European trading, an advance on 1.6800 over the remainder of the week looks possible.
GBP/USD: Dragonfly Doji Highlights Hesitation From The Bears
4 Hour Chart - Created Using FXCM Marketscope 2.0
This week’s gains for the pound have acted to negate the Dark Cloud Cover formation that had appeared near multi-year resistance for GBP/USD. The rally has arisen following a Piercing Line pattern which signaled the bulls were returning to the Cable. 1.6770 remains a critical level of resistance for the GBP/USD, given it has failed to close above the mark since 2008.
GBP/USD: Bulls Return As Piercing Line Forms on Weekly
Weekly Chart - Created Using FXCM Marketscope 2.0
By David de Ferranti, Market Analyst, FXCM
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