GBP-USD: Risk Still Points to Downside

By Mohammed Isah of fxtechstrategy.com

GBP-USD: Despite the pair's price hesitation on Friday following its Thursday sell off to a low of 1.6078, it continues to retain its downside bias triggered at the 1.6875 level, its Nov 16'09 low.

To see a chart of the cross currency pair, click here.

While both intra day gains and losses were reversed ending Friday's trading session on a flat note, as long as GBP holds and trades below its broken longer-term uptrend, the risk of further downside remains towards the 1.5706 level, its Oct 13'09 low, where a breach will see a 100% price retracement (from 1.5706- 1.6875 levels) and open the door for additional downside towards its .50 Ret (1.3501-1.7041 rally) at 1.5273.

Its daily RSI is bearish and pointing lower suggesting further downside.

Conversely, above its Nov 25'09 high at 1.6744 and the 1.6875 level, its Nov 16'0-09 high must be traded to reverse its current nearer-term downside threats and bring further gains towards its YTD high at 1.7041 level where a decisive invalidation will resume its medium term uptrend towards its .50 Ret (2.1160-1.3501 decline) at 1.7314.

Overall, GBP remains vulnerable to the downside while holding below the 1.6744/1.6875 levels as well as its broken longer term rising trendline.

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