GBP/USD (daily chart) as of February 6, 2013 has continued to be weighed down, fluctuating just above its six-month low of 1.5629 established yesterday. This low occurs within a steep bearish trend that was initiated off a fall from the 1.6300 resistance area in the very beginning of the year, and then a key breakdown below the 1.6000 level in mid-January. More recently, the downtrend pulled back to the upside in a three-day rally last week, only to erase those gains almost immediately and fall further since then. With price now closely approaching downside support around the 1.5600 price region, the bearish trend appears poised to continue. A breakdown below 1.5600 could become the trigger for a strong downtrend continuation move towards key further support around 1.5400 and then the 1.5250 area. In the event of a drop to the latter level, all of the gains made during the bullish trend of the second half of 2012 will have been eliminated.
James Chen, CMT
Chief Technical Strategist
City Index Group
Forex trading involves a substantial risk of loss and is not suitable for all investors. This information is being provided only for general market commentary and does not constitute investment trading advice. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any financial instrument and should not be used as the basis for any investment decision.
