By: Doug Rosen
GBP/USD pair is just as bearish as ever, however, it has reached what looks like a strong area of visual support. As strong as the USD has been, I would normally be very bearish but this support area we are hitting could be viewed as a double bottom.
I would be very cautious with this pair. Once it breaks, if it does, could be a very powerful move to the downside so watch this pair very carefully.
On the weekly chart we are way outside the Bollinger Band and we are a distance from the 5 ema and approaching the oversold zone on stochastics. All of this is bearish yet implies an imminent pullback. Since this pair has been very bearish, end of the week profit takers could trigger a strong pullback.
Moving over to the daily chart, we are within the Bollinger Band but against the lower band and gapped a distance from the daily 5 ema with an oversold stochastics so I can imagine price snapping upward a bit to connect with the daily 5 ema.
Price is way under the Monthly S3 as well as the Weekly S3 and price is hovering around the daily central pivot point and price does look like it wants to pullback a bit. Looking at the 4 hour chart price looks like it wants to fib its way back up and I can imagine a pullback up tot he 38.2 fib level of the recent swing down based on the 4 hour chart and the 38.2 overlaps with the monthly S3 and the 4 hour 21 and all this exists around the 1.5520 level so if you are into counter trading, that is the area I would expect sellers to enter.
Moving over to the 1 Hour chart I see the 5 ema has crossed above the 13 ema and price is heading towards the upper Bollinger Band and i am watching to see if it opens to the upside. Looking at the 15 minute chart the 5 ema is crossing above the 13 ema and it just has a slight bullish look about it.
The USD is dropping a bit on the US DOLLAR Index which may explain the bullish GBP/USD appearance. In my EUR/GBP analysis I pointed out resistance which may cause a slight drop or pullback which will cause some GBP strength.
Pullbacks on the bullish USD/CHF may cause a bit of USD weakness, add that to a bit of GBP strength and end of week profit taking from a bearish market maybe we can get some bullish pullback action on the GBP/USD.