Technical Analysis – GBPUSD falls below bearish flag to resume downtrend

Posted on October 1, 2014 at 7:30 am GMT. Read More Blog

There was a bearish flag chart formation on the daily GBPUSD. This continuation pattern is usually found in a downtrend.

GBPUSD resumed the downtrend after breaking below the flag to fall to 1.6165 on Tuesday and currently at 1.6210. It has scope to target the September 9 low of 1.6058.

The pair has retraced 78.6% of the rebound it made from the Sept 9 low to the September 19 high of 1.6523.

A falling RSI in bearish territory signals further downside potential. A falling tenkan-sen adds to the bearish market structure.

Support at 1.6058 is expected to be strong. If it fails to hold, prices could fall towards the November 2013 low of 1.5852.

Resistance stands at 1.6345, which is the 38.2% Fibonacci retracement level of the 1.6058-1.6523 upleg. A break above this would weaken the bearish structure and see open the way towards 1.6411 and 1.6523.