Cable (GBPUSD) has been falling since July last year. Cable, GBPUSD has recently reached a critical level and just hit the 61.8% Fibonacci retracement on the longer term weekly chart off the lows from 2009. Cable appears to be extremely oversold and it is quite likely that the currency pair rallies from this level for 300 to 400 pips. The cable could be rally and still be in a bear market. However, the dollar index is reaching an important point and it is possible for the green back to retrace, causing the Euro and GBP to rise against the green back short term.
Lets take a look at the charts to determine the technical picture.
Taking a look at the longer term weekly chart, the price is bouncing off the longer term 61.8% Fibonacci retracement.
From the above chart we can see that the price retreated after forming a AB = CD pattern and also a 161.8% Fibonacci expansion. This level provided strong resistance and the price has been falling since.
Lets take a look at the more recent 1 day technical picture, after forming a butterfly pattern the price has seem to found some support at has rallied today.
It is possible for the price to rally 300 – 400 pips and rally into strong resistance level as illustrated by the chart below.
Wish all good trading!