Forex Abode's  Instablog

On October 5th, 2012 GBP/USD had faced a strong resistance at 1.6217 and a strong fall had taken place from there. The recent upward move had taken the currency pair as high as 1.6218 i.e. 1 pips above that level but the pair has been hesitating to cross that resistance for past 23 hours.

What To Expect From GBP/USD

The break over that resistance was just by 1 pips but it indicates that some good possibilities are there for further gains but the long hesitation also indicates the chances of some consolidation before that.

The recent pattern the price action has been showing is a support near 5-day EMA. If any decisive break below 1.6175 takes place then it would represent a break of that support. Such an action may bring further downward consolidation towards 1.6140/1.6155 support zone. This support zone is derived from Kijun line support of daily Ichimoku cloud as well as the 38.2% retracement of the upward move since December 10th. Not only that but 1.5154 was a support during the beginning of this week.

Considering the combination of the above 3 supportive forces, a recovery is expected from this support zone. Any break above the recent 1.6218 should take GBP/USD first towards 1.6365 and then possibly towards 1.6450.

Any strong break below 1.6140 should bring another strong support near 22-day EMA i.e. near 1.6105. This support zone is also important as the psychological support of 1.6000 ranges should start acting for the currency pair from here.

Overall, out bullish outlook will remain intact till the price action remains over 1.6040.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.