Richard Perry
Independent Analyst
GBP/USD
The technical rally has been faltering around 1.3000 in recent days as the overhead supply between 1.2980/1.3050 has been a barrier to recovery. Yesterday’s sharp retreat once more reflects the lost control of the Cable bulls and the market is on the brink of turning decisively corrective now. The support that formed at 1.2760 is key because if there is a closing breach, it would signal 1.3005 being a key lower high as part of a new technical downtrend. It would open 1.2650 initially as the next key test, being the bottom of the old breakout levels of the old April to July ceiling. A failure of this support would open a much deeper correction, towards 1.2480 and possibly 1.2250. So how the market resolves this little 1.2760/1.3005 range will be key. Today’s early slip lower threatens the support. Looking at daily momentum indicators turning increasingly negative (RSI failing at 50, Stochastics bear cross and MACD falling under neutral) the risk is certainly to the downside now. A closing break confirms. The hourly chart shows a decisive move above 1.2860 is needed to improve now.
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