The Pound has broken its recent trading range between 1.6600 and 1.6770 suggesting further declines may be in store for the currency. This comes following several successive short sessions that suggested conviction was not be strong enough amongst the bulls to push prices back to the 1.6770 top. The break lower opens the 61.8% Fib Retracement level at 1.6470 and below that a target is offered by the 2014 low at 1.6260.
GBP/USD Breaks Recent Range
Daily Chart - Created Using FXCM Marketscope 2.0
Drilling down to the four hour chart; there is evidence of hesitation amongst the bears to push the Pound lower, given the formation of several Doji candlesticks near support at 1.6530. While an intraday bounce may be possible, it would be seen as an opportunity to enter new shorts based on the context provided by the weekly and daily charts.
GBP/USD: Dojis Highlight Hesitation
4 Hour Chart - Created Using FXCM Marketscope 2.0
The ominous Dark Cloud Cover formation on the weekly at multi-year resistance also remains on the radar, and is threatening a more significant correction ahead for the Pound. A potential target is offered by the 23.6% Fib Retracement Level near 1.6350.
GBP/USD Weekly Continues To Offer Warning
Weekly Chart - Created Using FXCM Marketscope 2.0
By David de Ferranti, Market Analyst, FXCM
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