Forex: GBP/USD Technical Analysis – Support Above 1.62 in Focus
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- GBP/USD Technical Strategy: Flat
- Support: 1.6260 (50% Fib ret.), 1.6164 (61.8% Fib ret.)
- Resistance: 1.6356 (38.2% Fib ret.), 1.6433 (channel bottom)
The British Pound fell as expected after showing a Bearish Engulfing candlestick pattern. Sellers are now testing support at 1.6260, the 50% Fibonacci retracement, with a break below that targeting the 61.8% level at 1.6164. Alternatively, a daily close back above the 38.2% Fib at 1.6356 aims for the underside of a rising channel bottom set from set from mid-December, now at 1.6433.
A Hammer-like candle above support points to indecision and hints a bounce may be in the cards, warning against betting on downward continuation. Confirmation of a turn higher is absent however and prices are too close to resistance to make a long trade attractive from a risk/reward perspective. Finally, the upcoming BOE policy announcement represents potent event risk, bolstering the case for staying on the sidelines in the near term.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.