After failing just shy of 1.6700, the GBPUSD reversed sharply and trades over 350 pips from its daily high. Failures at channel resistance and a short term head and shoulders pattern warn that the AUDUSD may be the next pair to take a plunge.
Yesterday, I wrote that “a rally above 1.6643 would complete 5 up from 1.6239 and shift risk lower towards 1.6500 (at least). 1.6715/50 is a resistance zone that I will sell into.” I later updated those levels to 1.6670-1.6750 at DailyFX Forex Stream. After trading to a high just below 1.6700 (the high was made close to the 61.8% extension of the 1.5707-1.6404 advance), Cable has plunged over 300 pips. Former supports are now resistance at 1.6484, 1.6530, and 1.6607. Next week’s strategy will probably focus on shorting on rallies. Short term support is 1.6300/20. There are a number of patterns that could be underway from 1.6750, which will be discussed in FX Technical Weekly (published later today).
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary at DailyFX Forex Stream.
