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Talking Points:
- GBP/USD Technical Strategy: Flat
- Support:1.6742 (Feb 14 close), 1.6687 (23.6% Fib exp.)
- Resistance: 1.6829 (38.2% Fib exp.), 1.6943 (50% Fib exp.)
The British Pound advanced against the US Dollar as expected after prices formed a Bullish Engulfing candlestick pattern above trend line support set from mid-November. The pair is now testing resistance marked by the 38.2% Fibonacci expansion at 1.6829, with a break higher aiming for the 50% level at 1.6943. Alternatively, a turn below resistance-turned-support at 1.6742 – the February 14 close – exposes the 23.6% Fib at 1.6687.
Prices are too close to relevant resistance to justify a long position from a risk/reward perspective. On the other hand, the absence of a defined bearish reversal signal argues against taking up the short side. 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