GBP USD Trend Turns Down

The GBP USD took out a swing bottom at 1.6274 and turned the main trend down on the daily chart. The current chart pattern suggests that 1.5982 is the next downside target.

The GBP USD took out a swing bottom at 1.6274 and turned the main trend down on the daily chart. The current chart pattern suggests that 1.5982 is the next downside target.

The British Pound has been under pressure since August 6th when the Bank of England voted to expand its quantitative easing program. This news sent a message to traders that the central bank was prepared to print money to help revive the sluggish economy. Sellers are also pressing this market because perceptions are building that a recovery in the U.K. will lag both the U.S. and Europe.

The EUR USD is down at the midsession after giving back overnight gained fueled by a better than expected German business confidence report. Although economic reports out of the Euro Zone have been showing marked improvements, traders have been reluctant to take the Euro to a new high for the year. Gains are being limited because of comments from Trichet saying the road to recovery will be bumpy.

Sharply lower crude oil prices are helping to pressure the Canadian Dollar. The big story helping to rally the USD CAD, however, is the comments from a Bank of Canada official who late yesterday expressed concerns that the appreciation in the Canadian Dollar could be detrimental to economic growth. Traders are liquidating long Canadian Dollar positions out of fear the BoC may take action to curb the appreciation of the currency.

The USD CHF is finding strength at the midsession. Despite the strength, this market is still trading inside of its 90 day range.

Interest in higher yielding currencies appears to be dropping because of the weakness in U.S. and Chinese equity markets. A divergence between the AUD USD and the U.S. stock market is indicating that a break is imminent. The same type of pattern is developing in the NZD USD as traders seem to be getting ready to begin dumping higher yielding assets.

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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