Richard Perry
Independent Analyst
GBP/USD
A bearish breakdown on Friday has ended thoughts of a consolidation on Cable and opens for a corrective move. A decisive closing break below $1.2300 not only took the market clear under the 50% Fibonacci retracement (of $1.3200/$1.1405) but also broke what had been a trading range formation (shown best on the hourly chart). Furthermore, the breach of the spike low at $1.2250 confirms that the bulls have lost control of Cable right now. Momentum is beginning to deteriorate, with RSI faltering under 50 and now means that the Stochastics are at risk of topping out too. The hourly chart shows that $1.3200 has become the basis of resistance since being broken, whilst momentum is increasingly corrective. A -185 implied downside target from a near term top pattern suggests $1.2120 (also a minor support area) is under pressure now. There is also little real support beyond there until the $1.1930/$1.2000 support. Near term rallies are increasingly struggling between $1.2250/$1.2300 and intraday rallies are seen as a chance to sell now for Cable as the outlook turns corrective.
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