Forex Depth Analysis: GBP/USD

U.K and Iceland quarrel declines pound against upbeat dollar.

The pound dropped to the lowest level against the dollar in almost five years on concern a dispute between the U.K. and Iceland over financial assets in each other's countries will escalate.
The currency headed for a second weekly decline after Prime Minister Gordon Brown said yesterday the U.K. may freeze the assets of Icelandic companies. The two nations are tussling over who should compensate British savers with money locked in accounts at Kaupthing Bank hf and Landsbanki Islands hf after Iceland's banking system collapsed.

The following technical analysis gives us a detailed lookout on what is expected to happen to GBP/USD.

The buying point is at 1.7160; based on a break of strong resistance.

• Fibonacci 61.8 is the take profit at 1.7614
• Pivot point is the stop loss at 1.6894

The selling point is at 1.6945; based on a clear downtrend.

• Pivot point is the take profit at 1.6765
• Fibonacci 23.6% or Pivot point is the stop loss at 1.7146

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of MACD line to the signal line and is pointing downwards. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a downtrend.

The momentum oscillator is very important to understand the strength in the market and as we see on the graph it is in a bearish direction. The Stochastic oscillator crosses %D and line.

* The following analysis is for information only; Finotec is not responsible for any decisions or misinterpretations based on the given text.

Finotec Group Inc.
http://www.finotec.com/

Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.