GBP/USD 1H chart 10/3/2013 10:40AM ET
Bullish: GBP/USD has been bullish since July’s and the 2013 low of 1.4812. The latest leg after a consolidation came from 1.5954 and has found resistance at 1.6259. The 1H chart shows strong bullish trend with price trading above a rising 200-hour SMA since early September. However, this bullish mode looks to be struggling at the moment.
Double top: The market failed to push above 1.6259 on 10/2 and is falling during the 10/3 session. A break below 1.6160 will complete a double top, which can suggest at least some short-term consolidation, possibly a bearish correction.
Bearish projections/supports: A conservative correction scenario would be a test of the 200-hour SMA, which has been providing support as seen during the 9/24-9/26 sessions. A breakout projection using the range of the double top targets 1.6160 – 100 = 1.6060.
The RSI is falling below 40 which shows lack of bullish momentum. Last couple of times it tagged 30, it found support and continued the bullish trend. Will this repeat if a bearish correction develops from the current double top? Or will cable start trading under the 200-hour SMA and open up the 1.5954 pivot.
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