GBP/USD Technical Analysis: All Eyes on Key Wedge Top
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- GBP/USD Technical Strategy: Short at 1.6233
- Support: 1.6066, 1.5893, 1.5720
- Resistance: 1.6184, 1.6377, 1.6532
The British Pound may be carving out a bottom against the US Dollar after putting in a bullish Piercing Line candlestick pattern. The appearance of a rising wedge chart formation coupled with positive RSI divergence bolsters the case for a downside scenario. Near-term resistance is in the 1.6140-84 area marked by the wedge top and the 23.6% Fibonacci retracement, with a daily close above that exposing the 38.2% level at 1.6377. Alternatively, a reversal below the 14.6% Fib at 1.6066 clears the way for a challenge of 1.5893, the intersection of the wedge floor and the October 2013 low.
We entered short GBPUSD at 1.6233and have since taken profit on half of our exposure. The remainder of the trade is open to capture reneweddownside momentum in the event that the wedge setup fizzles, with a stop-loss at the breakeven level (1.6233).
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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.