GBP/USD 4H chart 8/28/2013 10:05AM ET
(click to enlarge)
Correction, trendline, outside bar: GBP/USD has been in a bearish correction. There are factors that can be considered support around 1.5415 as noted in the previous FXTimes GBP/USD update. As the US session got started, the 8AM – 12PM 4H candle bounced off the suspected support area and developed an outside bar that spanned the previous 5 4H-candles.
A this point, a break below the 1.5415 level would be a bearish continuation signal.
A break above the 1.5575 pivot should clear a short-term falling trendline and signal bullish continuation. Note that the falling action could be assessed as a flag pattern in this bullish scenario.
The outside bar does hint at bears losing control at a critical level so the bullish outlook remains intact. But its not a big deal, we still need to see breakout from 1.5415 or 1.5575 for further directional clues. Still, the “engulfing” candle reaction should be noted.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.