GBP/USD Technical Analysis: Bounce to Follow Deep Plunge?
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- GBP/USD Technical Strategy: Pending Short
- Support: 1.6676, 1.6625, 1.6573
- Resistance:1.6739, 1.6778, 1.6842
The British Pound moved aggressively lower against the US Dollar, issuing the largest daily drop since January and sinking to the lowest level in four months. Near-term support is at 1.6676, 38.2% Fibonacci expansion. A daily close below that initially exposes the 50% level at 1.6625. Positive RSI divergence warns a turn higher may be around the corner however. A move above the 23.6% Fib at 1.6739 clears the way for a challenge of the 14.6% expansion at 1.6778.
Risk/reward considerations argue against entering short with prices sitting squarely at support. On the other hand, the absence of a defined bullish reversal signal suggests taking up the long side is premature. We will remain flat for now.
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Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com