By Mohammed Isah of fxtechstrategy.com
: The pair could be on its way to a third day of weakness as its loss of upside momentum at the 1.6842 level, its Nov. 9 high, continues to put it under pressure.
The pair was seen in early trading Thursday heading toward its short-term rising trend line, which is currently at 1.6466. We would expect a temporary halt there, but if the pair breaks through that level, it could then move toward strong support in the area from 1.6249 to 1.6260. Those are the Oct. 26 and Nov. 3 lows, respectively.
We believe that area should provide a wedge and turn the pair back up. This zone is very crucial in the pair's recovery off the 1.5706 level, its Nov. 13 low, and it must hold to preserve that recovery.
However, if a decisive break through there occurs, we expect the pound to weaken further against the dollar, toward its Oct. 30 high at 1.6124 and then toward 1.5706. Its daily studies are both bearish and pointing lower, supporting this view.
In order to reverse its current downward trajectory, the the pair must break back above the 1.6740 and 1.6842 levels. Then it could target the 1.7041 level, the year-to-date high. A penetration of that level would lead to the resumption of the pair's medium-term uptrend toward its .50 Ret (2.1160-1.3501) at 1.7314.
On the whole, the pound remains under pressure, having collapsed from the 1.6842 level.
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.