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Gbp/Usd Update: Uptrend Looks Tired

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Oct 14 2010

Pound was one of the weakest currencies out there in recent trading sessions and days, but not against the US dollar. Pair regained after the market formed only a corrective decline from 1.6015 down to 1.5752 region, which suggests that a blue wave (B) shown from 1.5290 August low is still unfolding. Overall, the price structure from wave (A) low is very choppy, slow and formed a lot of overlaps which is a clear personality of a correction. As such, we like the idea that this upward move is only a temporary, probably a part of some larger corrective structure, maybe a flat pattern. With this being said, a downside reversal into a lower blue wave (C) may appear once this month, but gains towards the 1.6150-1.6250 is possible before pair finds a final top. In fact, we can also see a bearish divergence on the MACD indicator, another signal for a potential downside reversal in days and weeks ahead. Right know however, trend is still very bullish, so only a five wave decline from a top and move below the channel support line will confirm a change in trend, from wave (B) top into a lower wave (C).

Gbp/Usd 4h chart:




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