GBPUSD Consolidation Pattern (October 6, 2014)
GBPUSD has been in a steady downtrend in the past weeks, more so last Friday when the US released a strong NFP reading.
Price has dropped from the 1.6150 area to 1.5950 where it is currently consolidating.
The US showed a 248,000 increase in hiring for September, outpacing the estimate of a 212,000 increase. Apart from that, previous data was also upgraded and the jobless rate fell from 6.1% to 5.9% in the period.
Stochastic is reflecting oversold conditions, which means that a pullback might take place. If so, price could retreat to the falling trend line near the 1.6100 major psychological level and the simple moving averages. MACD is also hinting at a possible short-term bounce, which might offer a better price to short.
A downside break from the current consolidation pattern is also likely, as a candle close below 1.5950 would suggest that bears are back in control. Setting short orders on a pullback to 1.6100 or a break below 1.5950 could catch the overall downtrend.
By Kate Curtis from Trader's Way