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Top in the Pound?

Top in the Pound?

2014-01-02 18:15:00
Kristian Kerr, Sr. Currency Strategist
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Talking Points

  • Strong negative January seasonality in the Pound
  • Important cycle turn window this week

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GBP/USD failed earlier today just below the 15th square root relationship of the 2012 low at 1.6610. This reversal has the potential to be significant given it has come during the Fibonacci cycle turn window we highlighted last week. January is also one of the worse performing months for the Pound on a seasonal basis so several factors seem to be aligning here for decent counter-trend move lower - if not a full-fledged reversal. Key support for us looks to be the 1.6410 level as a daily close below this level will confirm that a top of some importance is indeed in place. The 1.6610 resistance should hold over the next few days if the negative cyclical view is correct

GBP/USD Daily Chart: January 2, 2014

Range_Jan_2_body_Picture_2.png, Top in the Pound?

Charts Created using Marketscope – Prepared by Kristian Kerr

Key Event Risks in Coming Sessions:

Range_Jan_2_body_Picture_1.png, Top in the Pound?

LEVELS TO WATCH

Resistance: 1.6560 (Gann), 1.6610 (Gann)

Support: 1.6410 (Gann), 1.6380 (Gann)

Strategy: Sell GBP/USD

Entry: Sell GBP/USD at 1.6525

Stop: 1.6617

Target: 1.6350

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

Are you looking for other ways to pinpoint support and resistance levels? Take our free tutorial on using Fibonacci retracements.

To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter at@KKerrFX.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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