Strategy 13 November 2013 |
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We believe the pattern developing on the GBP/USD chart is a potential top. The market has failed twice recently at the 1.6255/60 region. The rally last week stopped dead at the 1.6122 61.8% retracement of the recent move down and focus this week is on the 1.5895 mid October low. A close below here is required in order to complete the potential top and offer a downside measured target to 1.5533.
This is a minimum downside target, however given the close proximity of the 200 day ma at 1.5495 this is likely to provoke some profit taking.
In addition to the potential top, the market has also recently backed away from its 2009-2013 downtrend, this is located at 1.6308 and reinforces overhead resistance. Our longer term bias is therefore negative and this suggests that longer term we should in fact see a slide sub 1.50 once more.
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