By: Mike Kulej
Just like most other currencies, the British Pound has advanced strongly against the US Dollar. From a low of 1.5344 at the start of 2011, the GBP-USD rallied to as high as 1.6745 about two weeks ago. Since then, however, the price has been drifting down.
This move puts the preceding uptrend in question, especially the fact that the price has moved under the main trendline. To be precise, on the daily chart the price not only moved through the trendline, but also managed to close under it. Breaking this important support could be a sign of more bearish pressure.
We would like to see additional confirmation of this newly emerging bearishness. For example, the MACD should cross the zero line, something that might happen as early as Monday. The RSI is already falling, in line with the price action.
The next significant obstacle is a minor low 1.5940. If that gets broken, the GBP-USD will find itself in an all out bear market, possibly falling to the yearly low of 1.5344. For now, with the broken trendline, the pressure is down, and likely to continue.