GBP/USD (daily chart) has maintained its bearish stance after a 2-week tumble that broke down below a series of support levels. The major bearish technical event occurred last week as price broke down below an important support confluence around the 1.6000 price region. This confluence of support included a major bullish trend line extending back to the June 2012 low at 1.5266. Before this trend line support was broken to the downside last week, it had been tested and respected at least 5 times, further reinforcing its validity each time. After the breakdown below this trend line and the important 1.6000 support level, price dropped towards further downside support around 1.5825, re-testing the mid-November low. The pair then stalled and fluctuated around 1.5825 before dropping further yesterday and today to hit the 1.5750 support level and establish a new 5-month low for the pair. On a further breakdown below 1.5750, continued bearishness could move price towards key potential support around 1.5600.
James Chen, CMT
Chief Technical Strategist
FX Solutions
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