GBP/USD Technical Analysis: Short Entry Sought on Bounce
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- GBP/USD Technical Strategy: Pending Short
- Support: 1.6743, 1.6699, 1.6654
- Resistance:1.6798, 1.6833, 1.6888
The British Pound fell as expected against the US Dollar after putting in a Hanging Man candlestick with negative RSI divergence. Sellers now aim to challenge the 38.2% Fibonacci expansion at 1.6743, with a break below that on a daily closing basis exposing the 50% level at 1.6699. Negative RSI divergence warns of ebbing downside momentum however and hints a bounce may be ahead. A turn above the 23.6% Fib at 1.6798 opens the door for a test of the 14.6% expansion at 1.6833.
We are opting to stand aside for now. Long-term charts reveal sellers face a 5-year support line at 1.6745. This coupled with RSI divergence and our fundamental outlook leave room for a corrective bounce. We will wait for that to play out, aiming to use it as a selling opportunity.
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Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com