Trend line Breakout – GBP/USD Bears Look For Corrective Move Lower

• The GBP/USD currency pair has had numerous recent sharp moves to the upside and a sustained break of the ascending trend line could potentially see a corrective move lower as cable is looking overbought in the near term. 
• Aggressive GBP/USD bears could have seen the failure to break the 14/10/11 1.5851 high and subsequent 1 hour bearish outside candle as an opportunity to pre-empt the trend line break. 
• This also gave an intra-day double top with price only falling 4 pips short of taking out last weeks high.
• Bearish MACD divergence can be seen on the 1 hour timeframe (see bottom chart).
• In the medium term the short-covering rally has seen cable recover from the aggressive markdown following the BOE QE announcement earlier this month.
• Latest COT report data shows large speculators have cut back on sterling short positions from –68,724 on the 4th October to 61,972 on the 11th October and remain bullish on the US dollar.

GBP/USD 1 Hour Chart Shows Trend Line/Double Top and Bearish Outside Candle.

A Closer Look Also Shows Bearish MACD Divergence (12,26,9).