GBPUSD And Resistances
GBP/USD had fallen very strongly since the beginning of 2013 to March second week. The fall had taken the currency pair from 1.6381 to 1.4831 i.e. 1550 pips. The rise from that low was strong and after some resistance near 38.2% retracement of that fall, the pair had managed to break over it. The upward gains took it to 1.5606. The interesting point here is that 1.5606 is the exact 50% retracement of the move from 1.6381 to 1.4831. A strong resistance was faced at this level for 2 weeks during end of April and 1st week of May 2013. The failure had a strong fall. The second rise from the recent bottom of 1.5008 tried to break this resistance of 50% retracement during last to last week but failed. Last week again the pair struggled against the same resistance.
GBPUSD's Struggle Against The Resistance Of 50% Retracement
At Last The Break
This week brought the long awaited break
The above mentioned resistance was not the only one to be careful about. Since the beginning of September 2009 to mid-February 2013 i.e. for almost three and a half years the price action of GBPUSD had been inside a slightly ascending triangle. During February 2013 the pair had broken below the support trend line very strongly. This break after such a long time had fueled the bearish sentiments.
Weekly Chart of GBPUSD With The Trend Lines
The interesting point is that now this previous support trend line seems to have turned into a resistance trend line. The previous upward jump had found resistance just below this line during April last week and May first week of 2013. And now the recent upward move is again finding resistance near the same trend line. Interestingly the 61.8% retracement from the above mentioned move and the resistance of the support turned resistance trend line fall in the same range. If this resistance holds then another bigger fall cannot be ignored. However a break of this resistance may see GBP/USD to test the previous resistance line by moving towards 1.6300 or higher.
You may also check this chart alert for GBP/USD.
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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.