Cable’s Path of Least Resistance

• faithmight
• December 12th, 2011

The $GBPUSD currency pair has been rangebound between 1.5560 and 1.5750 for the last 2 weeks. I’ve been a vocal bull on the pair during this time for central bank reasons. And techincally, the bottom of the range at 61.8 Fibonacci retracement line was holding very nicely as support. But for the bullish case to be completed, price needed to 1) make a new high above 1.5800 and 2) hold and find support above 1.5750. Neither happened. Because these necesssary requirements for bullish continuation never occured, price fell back again towards the bottom of the range at the end of the week. What can’t break higher will fall lower.

Now to start the week, the range bottom has been broken. The 61.8 Fibonacci retracement level that had been support the last 2 weeks has also been broken. It looks like bears are gaining momentum. This is confirmed with a candle close below 1.5550. Bears first target 1.5500 major large quarter point and psychological level. But all eyes are on the recent low at 1.5423. Price need to break below this level to confirm the currently bearish price action. Bears ultimately target the year’s low at 1.5270.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Tickers: FXB, GBPUSD

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