Forex: GBP/USD Technical Analysis – Critical Resistance in Play
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- GBP/USD Technical Strategy: Flat
- Support: 1.6410 (38.2% Fib ret.), 1.6349 (23.6% Fib ret.)
- Resistance: 1.6459 (50% Fib ret., channel bottom), 1.6508 (61.8% Fib ret.)
The British Pound fell against the US Dollar as expected following the formation of a Bearish Engulfing candlestick pattern. The UK unit reboundedas we suspected last week but key resistance looms ahead at 1.6459, the intersection of a rising channel bottom and the 50% Fibonacci expansion. A break above this boundary on a daily closing basis targets the 61.8% level at 1.6508. Alternatively, a move back below the 38.2% Fib at 1.6410 aims for the 23.6% retracement at 1.6349.
Entering a long trade here looks premature absent a clearly defined break of resistance on a daily closing basis. Assuming resistance will hold and taking the short side lacks concrete evidence however. As such, we will wait for now and look for something more actionable to emerge.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com