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GBP/USD - On the Crossroads?

Currencies / British Pound Dec 10, 2012 - 05:11 AM GMT

By: Forex_Abode

Currencies

GBP/USD went as high as 1.6130 but then went into sideways mode. Another attempt of upward jump failed 2 pips below it i.e. 1.6128 and the fall took the current pair to 1.6002 before the weekly closing at 1.6042.

On one hand the break above the psychological level and a move as high as 1.6130 brings in the bullish outlook but on the other hand a failure much below November 1st's 1.6175 argues in favor of some more consolidation if a break below the psychological 1.6000 takes place. Please also check this blog post about GBP/USD.


With the current price action we stay neutral initially. As mentioned that a break below first 1.6000 but most importantly 1.5962 of November 28th is required to indicate that the bullish sentiments have ended, at least for the time being. On the downside, if such a break takes place then further downward consolidation, first towards the support near 1.5920 and then possibly a retest of 1.5828 will be expected.

However, is support neat 1.6000 and even with any break of that near 1.5962 holds and a break over 1.5962/1.5965 takes place then the focus will turn back towards upside for a retest of 1.6130 first and with any break of that towards 1.6175 of November 1st. GBP/USD had found strong resistance near this level recently.

On October a strong resistance was witnessed just 3 pips above this i.e. at 1.6178. Any decisive break above this and then the resistance near 1.6215/1.6220 should target a retest of 1.6309.

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