GBP/USD Technical Analysis August 19, 2011

GBP/USD fell as the world got spooked by fears coming out of Europe involving the debt crisis, and the Philly Fed numbers came in very poor. The reality is that the world could be slipping into recession, and if that is the case – the USD normally gains as a safe haven play. The GBP has been strong recently, and the bounce later in the day shows that it might remain so.

The technical signal is simple: If we break the highs of Thursday, (and the highs of Wednesday for good measure) we should see a run to 1.68 before it is all over. If we break below the bottom of the hammer from Thursday, it would be a confirmed hanging man formation – a very bearish signal indeed. If we break below that, it looks like 1.61 could be our initial target.

Written by FX Empire