GBP/USD 4H Chart 7:16AM 10/19/2012
Failed Breakout: The GBP/USD was cracking a declining consolidation trendline. Clear above 1.6180 would probably have done so and return focus to 1.63. However cable respected the trendline as seen in the 4H chart and fell sharply at the end of the 10/18 US session. The heavy price action has brought the RSI to 40, below which reflects lost of the re-established bullish momentum in this time-frame. Also falling below 1.6050, and the 61.8% retracement there shows this downswing might be more than just a correction to the rally since last week.
Consolidation: This retreat puts the GBP/USD back in consolidation mode. The daily chart shows the RSI stuck between 40 and 60 with heavy price action. The 1.5975 October low is now the focus with 1.5913 the next pivot below that in the short-term. Direction in this daily chart time-frame will be unclear until a breakout of key support and resistance factors.
Support and Resistance: The key support factor is the rising trendling from May low of 1.5265. There is still room to about 1.58 before the market meets this trendline. To the upside, the break of the consolidation trendline opens up 1.63. Clearing above that key resistance area than opens up the 2011 highs near 1.6620 and 1.6750.
GBP/USD Daily Chart 7:25AM 10/19/2012