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- GBP/USD Technical Strategy: Short at 1.6710
- Support: 1.6593 (23.6% Fib ret.), 1.6452 (38.2% Fib ret.)
- Resistance: 1.6709 (trend line), 1.6742 (Feb 14 close)
The British Pound may be gearing up for a rebound against the US Dollar as prices show a Doji candle at support marked by the 23.6% Fibonacci retracementat 1.6593. The setup warns of indecision following three consecutive days of losses, which may precede an upswing. A break above rising trend line support-turned-resistance at 1.6709 exposes the February 14 close and current range top at 1.6742.
We entered short GBP/USD at 1.6710 after prices produced a Bearish Engulfing candlestick pattern. We will now take profit on half of the position and revise the stop-loss to the breakeven level (1.6710) on the remaining portion, allowing for the possibility that indecision marks a pause before downward continuation but slashing risk exposure.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com