According to Axel Rudolph, analyst at Commerzbank, GBP/USD last week executed a hammer reversal pattern just ahead of the 50% retracement at 1.2830, suggesting that the move lower is probably done for now.
“The market has also reversed just ahead of 1.2808 the 55 day ma. It guards the 1.2669/62 mid-January and August lows. The intraday Elliott wave counts however remain negative and we will hold onto our newly established shorts for today. Intraday rallies will now find resistance at 1.3024, the 200 day ma, and will stay offered below here. Above here should be enough to cast our eyes back to the 1.3217 recent high.”
“Overhead lies the 55 week ma at 1.3258. Here we also find the July, September and October highs at 1.3258/1.3363. We suspect that this will hold and provoke failure. Above here would target the June high at 1.3473 and the 200 week ma at 1.3631 (not favoured).”