By Mohammed Isah of fxtechstrategy.com
continues to head lower. After reversing its intraday gains on Friday, the pair traded as low as 1.6075 before closing the session at 1.6110.
With this type of bearish price development, the pair has turned its focus to its strong support levels at 1.5892/1.5830, the Jan. 7/Dec. 30 lows.
to view a chart of the currency pair.
This comes on the back of a loss of upside momentum at 1.6456 on Jan. 19, which was followed by a price collapse that drove the pair through solid support at the 1.6234/1.6239 levels, its Dec. 31/Jan. 4 highs.
That culminated in Friday's low of 1.6075 and a bearish weekly close.
With a bearish weekly tone set, we see the risk of further downside weakness initially toward the 1.5892 level. A break through there would pave the way for a run at 1.5830, the Dec. 30 low.
A sustained violation of that level would resume the pair's declines initiated from the 1.6875 level in mid-November and set the stage for further declines toward 1.5706, the pair's Oct. 13 low. A break there would see a 100% price retracement of the move from 1.5706 to 1.6875 and open the door for additional pressure toward the pair's .50 Fibonacci retracement (1.3501-1.7041 rally) at 1.5273.
The daily and weekly relative strength indices remain bearish and point lower, suggesting further weakness.
However, if a recovery higher is triggered, we will see initial resistance at 1.6234/1.6239, followed by the Dec. 16 high/short-term falling trend line at 1.6409/1.6422.
Overall, the GBP/USD's short-term outlook remains to the downside with eyes on the 1.5892/1.5830 levels and lower.
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.