Technical analysis of GBP/USD
If we look at Fig. 2.29(a) we see that on 13th January the GBP reached a low of 1.52321 against the USD. Since then it has strengthened significantly and the price right now, on the morning of 29th February, is 1.59291.
While this is marginally higher than the recent maximum of 1.59274 we saw on 8th February, it is still too early to predict that we will soon seen new highs. We will have to wait for additional confirmation before that can happen.
The Ichimoku Kinko Hyo clearly shows that we are experiencing a short-term bull run. The green Chinkou Span line is well above the price of 26 periods ago and the current price is far above the Ichimoku cloud. Both the red Tenkan Sen and the blue Kijun Sen lines are also above the cloud, which is more evidence of a bull run.
If the price should rise significantly above the previous maximum of 1.59274 the earlier maximum of 1.61649 we saw on 31st October last year becomes the next target.
We should not forget the big picture, however. Fig. 2.29(b) is a weekly chart of the GBP/USD. Here we can clearly see that, from a longer-term perspective, the market is far from being in a bull phase. The price will have to move much closer to the 1.7000 level before we can start talking of a long term bull market.
Day traders will have to wait for at least two solid closes below the Ichimoku cloud before risking a short trade.
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