22 Jul 2015
GBP/USD: Sell-off risks remain fairly high - JPMorgan
FXStreet (Bali) - According to the Global FX Strategy Team at JP Morgan, as long as GBP/USD remains below 1.5788/1.5815, the sell-off risks remains fairly high in what looks like a H & S topping pattern.
Key Quotes
"The failure to stabilize above the 50 % retracement at 1.5878 triggered a dynamic sell-off to 1.5330, which looks like the A-leg down of a classical and broader A-B-C down-consolidation to 1.4951/1.4887 (pivot/int. 76.4 %)."
"The recovery from the recent low at 1.5330 is therefore running a high risk of only performing the countertrend B-wave rally up to 1.5788/1.5815 (int. 76.4 %/left shoulder), which would basically form the right shoulder of a broader H & S topping pattern in play since mid May."
"Only a break above 1.5815 would negate this topping pattern in favor ofa straight extension up to 1.6052 (pivot) if not towards 1.6525/72 (pivot/int. 76.4 %)."
"In the short-run, we are looking for a range breakout between 1.5815 (pivot) and 1.5373 (daily neckline) as the breakout of this range will provide early indications where to head next."
"A decisive hourly close above 1.5815 (i.e. above 1.5835) would challenge 1.6052 (potential wave 1 low) next, whereas a break below 1.5373 would at least call for a deeper setback to 1.4951/1.4859 (pivot/int. 76.4 %)."
Key Quotes
"The failure to stabilize above the 50 % retracement at 1.5878 triggered a dynamic sell-off to 1.5330, which looks like the A-leg down of a classical and broader A-B-C down-consolidation to 1.4951/1.4887 (pivot/int. 76.4 %)."
"The recovery from the recent low at 1.5330 is therefore running a high risk of only performing the countertrend B-wave rally up to 1.5788/1.5815 (int. 76.4 %/left shoulder), which would basically form the right shoulder of a broader H & S topping pattern in play since mid May."
"Only a break above 1.5815 would negate this topping pattern in favor ofa straight extension up to 1.6052 (pivot) if not towards 1.6525/72 (pivot/int. 76.4 %)."
"In the short-run, we are looking for a range breakout between 1.5815 (pivot) and 1.5373 (daily neckline) as the breakout of this range will provide early indications where to head next."
"A decisive hourly close above 1.5815 (i.e. above 1.5835) would challenge 1.6052 (potential wave 1 low) next, whereas a break below 1.5373 would at least call for a deeper setback to 1.4951/1.4859 (pivot/int. 76.4 %)."