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Talking Points:
- GBP/USD Technical Strategy: Flat
- Support: 1.6687 (23.6% Fib exp.), 1.6568 (trend line)
- Resistance: 1.6742 (Feb 14 close), 1.6829 (38.2% Fib exp.)
The British Pound pushed higher as expected against the US Dollar after prices put in a Bullish Engulfing candle pattern above trend line support set from mid-November. Buyers are now testing horizontal resistance at 1.6742, the February 14 close, with a break above that aiming for the 38.2% Fibonacci expansion at 1.6829. Alternatively, a reversal downward below the 23.6% level at 1.6687 targets the trend line (now at 1.6568) anew.
Risk/reward considerations argue against entering long with prices trading in close proximity to relevant resistance. On the other hand, taking up the short side looks premature absent a defined bearish reversal signal. With that in mind, 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