04, February 2013

GBP/USD (a 4-hour chart)

GBP/USD (a 4-hour chart)

General overview

After analyzing the pair we can say that the trend is uncertain now. The pair left the Ichimoku cloud and stayed below it and Kijun-sen. That fact formed a sell signal –"dead cross".

The current sell signal is confirmed and strong as Chinkou Span entrenched below the price chart and the price is below the Ichimoku cloud.

We look for possible movement to the first support level which is 1.5618. Should the price break out that level its next target will become the second support level – 1.5545.

The downward movement will be on as long as the price is below the Kijun-sen (1.5785) if the price consolidates above this line a sell signal will weaken and an upward movement may start.

The Chinkou Span is below the price chart. That is a good confirmation for the current sell signal.

Bollinger Bands shows the beginning of a downward movement, its bands once again expanded and directed downward.

MACD is turned down, indicating that the downward movement will be continued.

If the indicator changes its direction it could be a signal for an upward correction. The correction can be also caused if the price bounces from the resistance level –.5618

Trading recommendations

We suggest going short. The first our target is –1.5618. Should the price overcome it the next level 1.5545 as a target will be available.

You’d better place stop-loss above 1.5785 and with the lowering of the line move down it.

Take-profit can be placed just above the target levels –1.5625 and 1.5555.