GBP/USD November 12th – FX Technical Analysis Update
(Forex-FX-4X, 12th November, 2012)
- On Friday the GBP/USD currency pair experienced a sell off from just above the key psychological 1.6000 handle (1.6020 area highs) to print a fresh 2-month low around at 1.5887. This had cable closing below an ascending trend line and the previous 1.5900 area support lows, as marked by the 38.2% Fibonacci retrace level.
- When referencing the daily time frame chart below, we note there is a potential long term double top developing with the 1.6300 range highs closely aligned.
- Last weeks statement from the Bank of England (BOE) had the central bank holding rates at the record low 0.50% level and the asset purchase facility at £375 billion.
- A continuation of the previous week’s risk-off tone and associated investor uncertainty could see the US dollar (along with the Japanese yen and gold) gain further on safe haven flows.
- Any downside would be trading into the 100 and 200 day SMA (simple moving average) levels which converge around 1.5860, with the corrective risk of a reversion to the recent range if price can not push below this dynamic potential support zone.
- An extended move lower as the new week progresses could see a retest of the previous resistance area around 1.5780, with the 50% retracement level closely aligned. This area capped the GBP/USD upside, from June to August, and may now see some form of support if price moves lower. We also note that there is a possible third touch of the embryonic trend line (no third touch yet) in this area, adding further confluence.
Related terms: Pound/dollar analysis, Sterling news, GBPUSD forecast.