Technical Analysis – GBPUSD Hourly: back in range trading after 2-year high
December 11, 2013 12:13 pm
(click to enlarge)
Although the pound managed to make fresh 2-year highs during Tuesday’s (10 December) trading against the dollar, this momentum was not sustained and the pound fell back.
1.6464 was the highest level for the pair going back to August 2011.
The pound’s move was overextended as can be seen by the very high Relative Strength Index reading of 82 achieved when the 2-year high was made.
RSI readings above 70 are interpreted as overbought while readings below 30 are usually interpreted as oversold.
Current price action around 1.6375 is in the middle of support at 1.6317 and resistance at the high of 1.6464.
Price action has turned bearish, as the pound is trading below the 21-hour exponential moving average as well as below the 50-hour simple moving average.
The correction in turn has been relatively quick and the pound could be due for a bounce as RSI has turned oversold this time with a reading of 26.
To sum up, although recent price action has been bearish, the pace of sterling’s fall has been too rapid and there could be a reaction as indicated by the oversold RSI. Most probably the pound is taking a breather before reattempting to scale the recent highs.
(click to enlarge)
Although the pound managed to make fresh 2-year highs during Tuesday’s (10 December) trading against the dollar, this momentum was not sustained and the pound fell back.
1.6464 was the highest level for the pair going back to August 2011.
The pound’s move was overextended as can be seen by the very high Relative Strength Index reading of 82 achieved when the 2-year high was made.
RSI readings above 70 are interpreted as overbought while readings below 30 are usually interpreted as oversold.
Current price action around 1.6375 is in the middle of support at 1.6317 and resistance at the high of 1.6464.
Price action has turned bearish, as the pound is trading below the 21-hour exponential moving average as well as below the 50-hour simple moving average.
The correction in turn has been relatively quick and the pound could be due for a bounce as RSI has turned oversold this time with a reading of 26.
To sum up, although recent price action has been bearish, the pace of sterling’s fall has been too rapid and there could be a reaction as indicated by the oversold RSI. Most probably the pound is taking a breather before reattempting to scale the recent highs.
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