GBP USD Set Up For Rally to 1.6716 to 1.6793

A combination of friendlier than expected U.S. economic reports and thin market conditions are helping to rally the GBP USD this morning.

Daily Analysis

GBP USD

A combination of friendlier than expected U.S. economic reports and thin market conditions are helping to rally the GBP USD this morning.

Technical factors are also playing a role in this morning’s rally.  Looking at the bigger picture, this market found early morning support at the .618 retracement price of the July 8 to August 5 rally.  Based on the range of 1.5982 to 1.7042, this retracement level was 1.6387.  The actual low this morning was 1.6390.

The break from the August 5 top to today’s low creates a range of 1.7042 to 1.6390.  A retracement of this range could take the British Pound back to 1.6716 to 1.6793 before new sellers step in.

The recent break in the GBP USD was triggered by bearish fundamental news from the Bank of England.  The subsequent closing price reversal top at 1.0742 was confirmed this week indicating the potential for the formation of a major top.

The first leg down stopped short of taking out the last swing bottom at 1.6338 and turning the main trend down.  If this next rally stops in the retracement zone then look for the bears to go after this bottom sometime in the near future.

Daily Chart

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James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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