Forex: GBP/USD Technical Analysis – Passing on Short Trade Setup
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- GBP/USD Technical Strategy: Flat
- Support: 1.6536 (50% Fib ret.), 1.6469 (61.8% Fib ret.)
- Resistance: 1.6604 (38.2% Fib ret.), 1.6695 (trend line)
The British Pound looks vulnerable to continued selling against the US Dollar after prices narrowly edged below support at 1.6604, the 38.2% Fibonacci retracement. Sellers now aim to challenge the 50% level at 1.6536, with a further push below that exposing the 61.8% Fib at 1.6469. Alternatively, a reversal back above 1.6604 targets a falling trend line at 1.6695.
Considering a 20-day ATR reading at 83 pips, a short position targeting 1.6536 would require an entry price no lower than 1.6619 to maintain acceptable risk/reward parameters while utilizing a stop-loss activated on a daily closing basis. That puts the entry price above near-term resistance, arguing against taking a trade at present. As such, we remain flat.
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.