14, November 2013

GBP/USD (a 4-hour chart)

GBP/USD (a 4-hour chart)

General Overview

The pound fell to a two-month low against the dollar after the release of weak CPI report but then the pound recovered some of its losses. Annual inflation slowed in October to 2.2% from 2.7% in September - while everybody expected an increase of 2.5%. Core inflation grew by 1.7%, against expectations of growth by 2%. Retail price inflation fell to 2.6% y/y from 3.2% in September. The RICS rose in October to 57, the highest level since June 2002, but it was slightly worse than expected.

The pair is trying to consolidate below the 1.5890 support. If it succeed, the potential falling to 1.5550 will be confirmed, where we expect a return to a growth.

Tenkan-Sen and Kijun- Sen formed a «dead cross», Kijun-Sen is directed downside, other lines are horizontal. Ichimoku cloud is going down, Chinkou is below the chart, the price is inside of the Ichimoku cloud. We expect a short-term resistance from Kijun-Sen with a further decrease of the price.

The downward movement will be continued as long as the Kijun-sen is above the price.

The technical indicators confirm the probability of downward movement on the four-hour chart. Bollinger bands are directed downward. MACD histogram crossed the zero line from the top down, its volumes are increasing.

Trading recommendations

If the price consolidates below 1.5950, we will get a good signal for the downward movement. A reversal pattern "triple top" has been formed on a daily chart. The pair has just started to work out ‘triple top’, and the price updating of the historical low of 16.10.2013 only confirms that.