April 17, 2013 – GBP/USD (daily chart) declined significantly during early Wednesday trading to make a tentative downside breach of major support around the 1.5250 level. Currently, price is also around the vicinity of the 50-day moving average. This drop occurs after a pivotal turn to the downside that occurred late last week off a resistance confluence combining the key 1.5400 level and the 38.2% Fibonacci retracement of the steep plunge from the 1.6337 high in the beginning of the year down to the 1.4830 hammer candle low in mid-March.
A daily close below 1.5250 would provide further indication of a potential resumption of the strong bearish trend that has been in place since the start of the calendar year. In that event, the 38.2% upside correction that spanned from mid-March to mid-April would just be considered a simple and shallow pullback within a major downtrend. Further downside objectives on a potential bearish resumption reside in the near-term around the 1.5000 and then 1.4800 levels.
James Chen, CMT
Chief Technical Strategist
City Index Group
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