GBP/USD – A bearish signal?

Or long term consolidation?

It’s been an interesting day for cable, one that saw the dollar retreat before the pair quickly reversed course which raises many questions.

The reversal came at the 50 fib level which could be viewed as a bearish move. But it isn’t that simple. The pair tested the 61.8 fib a month and a half ago before breaking through the 200/233-day SMA band.

But then it failed to make a new low before breaking back above the moving average band. Hardly the action of a pair that’s taken a very bearish turn.

So I’m not yet getting overly excited about the 50 fib bounce, regardless of how aggressive it seemingly was.

If anything, this looks more like a pair in long term consolidation than one breaking into a major trend higher or lower. Time will tell.

A move below the rising channel – which itself is far from perfect – may be a bearish signal in the near-term, but beyond that many big support levels remain, starting with the September lows around 1.3725.

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