FX Lesson On GBP/USD: How Broken Support Becomes Resistance

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Pound is one of the weakest in this week, down almost 300 pips from Friday highs, currently trades around 1.5600-1.5680 range.

Guest post by Gregor Horvat

We at www.ew-forecast.com anticipated that move, on some basics of technical analysis “how broken support becomes resistance”.

Here is the chart and comments that we shared with our subscribers on Thursday, Nov 17th 2011 past week

  • Cable broke through the 1.5860/90 support region which could be start of something bigger to the downside, especially if we consider that prices slipped below the support line of a trading channel as well. But notice that even if we still count move from the top in a corrective way, such as double zig-zag, we still need one leg lower (wave (C)) after wave (B) bounce, which may occur in the coming session or two. Alternate count also signals for weakness after corrective retrace into 1.5860/90 area which will now tend to react as a resistance either in wave (2) or (B) wave! “Support becomes resistance; Resistance becomes support”. Bottom line: Weakness to come after any pull-back higher, while pair trades below 1.6090!

GBP/USD Elliott Wave Technical Analysis November 22 2011

And here is now the updated chart:

GBP/USD Elliott Wave November 22 2011

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About Author

Grega Horvat Grega is based in Slovenia and has been involved in markets since 2003. He is the owner of Ew-Forecast, but before that he was working for Capital Forex Group and TheLFB.com. His feature articles have been published on FXstreet.com, Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu, Insidefutures.com, etc. He recently won the award on FXStreet.com for Best Forex Analysis in 2016. At Ew-forecast he helps clients and educates them about the Elliott wave principle and how to label and track unfolding patterns in real time. His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets such as candlestick patterns, MA, technical indicators etc. His specialty, however, is Elliott Wave Theory which could be very helpful especially if you know how to use it in combination with other tools/indicators. EW-Forecast To be involved in the market effectively, you need the right guidance and resources, and our team can help you to achieve that. Our team is providing advanced informations about Elliott Wave theory in real time. The Elliott Wave Principle gives you a method for identifying the behavior of the markets and at what points the market is most likely to turn. We help new traders who are interested in Elliott Wave theory to understand it correctly. We are doing our best to explain our views as simple as possible with educational goal, because knowledge itself is power!

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