GBP-USD: Outlook for the pair has turned toward its hammer (Feb. 1, 2010) lows at 1.5849/30 and even lower following its loss of momentum at the 1.6068 level and ahead of its strong resistance at the 1.6075 level on Wednesday.
We now see risk below the 1.5849 level, creating further downside scope toward the 1.5830 level, its Dec. 30, 2009 low, ahead of the 1.5706 level, its Oct. 13, 2009 low where the pair may see a respite. Below there will resume its decline that started at the 1.7041 level toward its .50 Fibonacci retracement (1.3501-1.7041 rally) at 1.5273.
Its daily RSI is bearish and pointing lower suggesting further downside weakness. The risk to our current downside view will be a break and hold above the 1.6068/75 level, which should trigger further upside toward the 1.6274 level, its Jan. 28, 2010 high and its ST falling trend line at 1.6360. We expect these levels to reverse roles and turn the pair lower if seen. On the whole, GBP retains its broader downside weakness and now looks to trigger the resumption of its short-term downtrend.
Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces
for his subscribers. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.