GBP/USD Broke Down Range, Waiting for Confirmation

Forex Technical Update

GBP/USD 1H chart 3/4/2013 7:35AM EST

Consolidation range breakout: The GBP/USD ended last week  (3/1) with a break down of a consolidation range roughly between 1.5070 and 1.5220. The 1H chart shows a strong break and start of bearish momentum. Price cracked the 1.50 handle. The moving averages also got back to bearish alignment, that is until price returned above 1.50 to consolidate in a tight range, bringing the lower MAs (8 and 22) together.

Upside risk; central pivot: If there is a pullback, the 1.5150 level should be the maximum recovery IF the market remains bearish. A push above 1.5150 is an early clue that the break to the downside might be fake, suggesting another period of consolidation. Staying under 1.5150 continues the downside risk, which is along with the prevailing trend going back to 1.63 in January.

Bearish continuation: A push and hold below 1.4985 continues the downtrend. Note that the range breakout target is: 1.5072-(1.5218-1.5072) = 1.4926. Below that near-term target, there is a support pivot in the 1.4780-1.48 area before opening the 2010 low of 1.4225.

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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