Forex: GBP/USD Technical Analysis – Critical Trend Line Under Fire
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- GBP/USD Technical Strategy: Flat
- Support: 1.6544 (trend line), 1.6548 (38.2% Fib exp.)
- Resistance: 1.6598 (23.6% Fib exp.), 1.6683 (Mar 31 high)
The British Pound fell against the US Dollar as expected having formed a Bearish Engulfing candlestick patternbelow the 1.67 figure. Sellers are now testing support at a rising trend line set from mid-November (now at 1.6544), with a break lower targeting the 38.2% Fibonacci retracement at 1.6452. Near-term resistance is at 1.6593, the 23.6% level. A reversal above this boundary aims for the March 31 high at 1.6683.
Risk/reward considerations argue against entering short with prices trading in close proximity to relevant support. On the other hand, taking up the long side looks premature absent a defined bullish reversal signal. With that in mind, we will remain flat for now.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com