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Monday, November 4, 2013

GBPUSD: Testing the key support area around 1.5894


GBP/USD has declined sharply in the past few days and is now challenging the support area between 1.5894 and 1.5886 (17 September 2013 low). A short-term bounce is likely. Hourly resistances are given by 1.6006 (31 October 2013 low) and 1.6078 (30 October 2013 high).

In the longer term, prices have thus far failed to break the strong resistance area between 1.6302 (30 April 2012 high) and 1.6381 (see also the long-term declining trendlines). Given the deep overbought conditions, we would be medium term cautious on GBP/USD, especially as a potential double-top formation could be underway between 1.5894 and 1.6260 (01 October 2013 high). 

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