Forex Analysis: GBP/USD Plunges Below Support

0

May 28, 2014 – GBP/USD (daily chart) has plunged below its 50-day moving average for the first time since early April. Prior to this drop, the currency pair had been holding relatively high in the midst of more pronounced pullbacks occurring in other major pairs like the EUR/USD.

The current decline in GBP/USD occurs after price action hit a new four-year high of 1.6995 three weeks ago in early May, just short of its 1.7000 upside target. After dropping from that high, the currency pair pulled back to rebound off its 50-day moving average in mid-May. This same moving average, however, was unable to support Wednesday’s bearish move.

Despite the current bearish stance, the currency pair is still trading well within a sharp bullish trend that has been in place for the past 10 months – since the 1.4800-area low in July of 2013. Major support on this bullish trend in the event of further pullback resides around the 1.6500 price region, which is currently just above the pivotal 200-day moving average. To the upside, a rebound and recovery from support would continue to target the 1.7000 psychological level.

2014-05-28-GBPUSD

James Chen, CMT
Chief Technical Strategist
City Index Group

Forex trading involves a substantial risk of loss and is not suitable for all investors. This information is being provided only for general market commentary and does not constitute investment trading advice. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any financial instrument and should not be used as the basis for any investment decision.

Get the 5 most predictable currency pairs

About Author

James Chen is Chief Technical Strategist for City Index Group. He is also a Chartered Market Technician. He is the author of the books: "Essentials of Foreign Exchange Trading" (John Wiley & Sons, 2009) and "Essentials of Technical Analysis for Financial Markets" (John Wiley & Sons, 2010). Mr. Chen writes currency analysis, leads forex trading seminars and has appeared in numerous major financial media outlets, including CNBC, Bloomberg TV, Forbes, Reuters, Dow Jones, and the Associated Press.

Comments are closed.