07, October 2013

GBP/USD (a 4-hour chart)

GBP/USD (a 4-hour chart)

General Overview

GBP/USD falls under bearish pressure. The U.S. is still paralyzed by the political government shutdown. U.S. data show mixed labor market data: unemployment 308K versus 313K expected vs. 2.925M and 2.810M evaluation.

After not being able to break above 1.6250 on Thursday, the pair dropped to 1.6160 support to confirm a double top. Although a double top does not show that bears directly gained control over the price, it certainly provides an opportunity to consolidate in the coming days. Despite the weakness of the USD the pair is unable to rise. The breakthrough 1.6160 will complete the double top and may assume at least some short consolidation.

The current buy signal is strong and confirmed, as Chinkou Span is above the price and the price broke the Ichimoku cloud. The Kijun -Sen and Tenkan -Sen are crossed in a "golden cross" on a daily chart. Both trend lines are growing parallel to each other. The cloud is growing.

Bollinger Bands shows an upward movement. The bands are widening and going up. We should consider a long position.
The MACD histogram is growing.

Trading Recommendations

If the price manages to break down 1.6140, bears will continue to lower the price to the sloping support line 1.6100. A break of 1.6100 would say that a good downward correction is maturing. The support level 1.6050 will be the potential target in this case.