GBP/USD (daily chart) has tentatively dipped below the strong 1.6000 support level, hitting a 7-week low in the process. In doing so, price has also broken down below a key bullish support trend line extending back to the June 2012 1.5266 low. This tentative break down below support can be considered an important price event, as the pair has been attempting and failing to close below the 1.6000 area during the past two months. This occurs after price was equally unable to make a daily close above the key 1.6300 level within the past month, highlighting the pair’s inability to continue the entrenched uptrend after pivoting down off a clear shooting star candle around 1.6300 in the very beginning of 2013. In the event of a close below 1.6000 and continued downside momentum, which could indicate a possible trend change or interruption, price could move towards further potential support to the downside around the 1.5800-1.5825 price region.
James Chen, CMT
Chief Technical Strategist
FX Solutions
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