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GBP/USD Technical Analysis: Short Entry Sought on Bounce

GBP/USD Technical Analysis: Short Entry Sought on Bounce

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • 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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GBP/USD Technical Analysis: Short Entry Sought on Bounce

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.

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