GBP/USD intraday technical levels and trading recommendations for October 17, 2013
Strong bullish sentiment was found at the support zone around 1.4830, which pushed the pair to the upside reaching 1.5400, then 1.5700, where two prominent tops were established.
The uptrend line around 1.5430-1.5400 applied bullish pressure on the pair, which was able to break through 1.5720, which corresponds to the August highest level and the recently established top.
The market expressed obvious closure above 1.5575, which invalidated the previously mentioned H&S reversal pattern. This opened the way towards 1.6000, 1.6170, then 1.6260.
It is important to note that the market expressed bearish rejection off 1.6150-1.6200, which resulted in an inverted hammer weekly candlestick. That is why, a bearish movement was expected to take place during the last week provided that the bears contimue defending the weekly high at 1.6150. However, lack of bearish momentum enhanced by the weakness of USD allowed the bulls to step above 1.6200 (127.2% Fibo Expansion) for a short time until bearish domination came back into the market.
Failure to break down 1.5950. Instead, fixation above the price level of 1.5950 opened the way back towards 1.6160-1.6175. However, the early breakdown of 1.5950 will enable the bears to initiate a bearish swing towards 1.5900, then 1.5800 probably.
The pair probably established a Head-and-Shoulders reversal pattern, where the right shoulder is located around 1.6150, thus providing a valid sell entry on retesting after breakdown of 1.5950 ( neck-line) with SL located above 1.6220.
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