GBP/USD (daily chart as of July 31, 2013) touched a high of 1.5433 on
July 25, and closed at 1.5387, 13 pips below the key 1.5400 resistance
level, with a “high-wave” candlestick pattern. The 1.5400 mark is close
to the 61.8% Fib retracement level and the April 11 high. On July 26, we
had a doji that formed right at 1.5400 and right after that high-wave
candlestick. Price then turned down to retest the short-term uptrend
line (as shown on the daily chart). Note that the line was broken on
July 4 with high volatility events. However, it is still a significant
line to watch (at least for now), based on the price behavior from July
11 to July 17.
If the pair is unable to hold or validate the mentioned uptrend line,
more downside momentum may be expected. The testing of the line might be
choppy, especially with today’s event risk of the Fed interest rate
decision. More follow-through price action would be required to confirm
any major movement. Support levels are at 1.5026 (July 15 low) and
1.4810/30 (July 9 low and March 12 low). The daily RSI is falling from
above 50, and the MACD line is turning down and about to cross below the
signal line, which is below zero. Possible big market movements may be
expected today (last day of the month with a high volatility event), trade safely.
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