GBP/USD Forecast February 21, 2013, Technical Analysis

The GBP/USD pair fell drastically during the session on Wednesday, making a move well below the 1.5250 handle. Because of this, it certainly looks like we are going to reach for the 1.50 handle that we have been talking about over the last couple of sessions. In fact, it may be coming quicker than people realize as the Federal Reserve releases its minutes for the meeting last month, and the market seems somewhat shocked by the fact that the Federal Reserve suggested that quantitative easing may slow down. As a result, the US dollar got bid up against most currencies.

Looking at the shape of the candle, it does suggest that further weakness is ahead, not only because aware that, but the way that we closed at the very lows. Looking at this chart, there was a potential for supportive the 1.53 level, we have broken through that and it does appear that we are heading directly to 1.50 level. In fact, we think anytime there is a rally you have to sell this market. However, there is the possibility the wanting to get the opportunity for that pullback.

With this being the case, we are selling as soon as we break the lows for the session, or if we get some type of bounce that shows resistance. We will more than likely use a short-term chart in order to accomplish this trading signal, as the markets will more than likely move far too fast for the daily charts to be a reliable trading signal.

If the asset purchases by the Federal Reserve do in fact slow down, we could see a pretty significant move lower. However, there is no timetable as to when this happens, so we think that the 1.50 level will offer quite a bit of support, it we could in fact see about that area. In order breakdown through their, we have to see a real run away from risk appetite in general, which is something that could happen, but we don’t think it’s going to be one fell swoop of bearishness the gets is there.



Written by FX Empire