Price action on GBP/USD, a daily chart of which is shown, has continued its bearishness from last week, when price reached down to hit its expected 1.4500 downside target at the close of the week.
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(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)
This occurs within the context of a steep overall downtrend that began to accelerate in early May. Opening the new trading week, price has continued its descent all the way down to the 1.4250 price region, establishing a new 13-month low, before correcting significantly back up.
The bearish bias and downward momentum on GBP/USD, however, is likely not yet over. A key downside price target on continued bearishness resides around the 1.4100 price region. To the upside, the noted 1.4500 price region should now serve as tentative upside resistance after having just been broken to the downside within the context of the strong continuing downtrend.
By James Chen, chief technical strategist, FXSolutions.com
