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Talking Points:
- GBP/USD Technical Strategy: Short at 1.6233
- Support: 1.5876, 1.5720, 1.5565
- Resistance: 1.6066, 1.6184, 1.6377
The British Pound may be setting up for a move higher against the US Dollar after producing a bullish Piercing Line candlestick pattern. The outlines of a falling wedge chart formation reinforce the case for an upside scenario. A daily close above the 14.6% Fibonacci retracement at 1.6066 exposes the 1.6155-84 area marked by the wedge top and the 23.6% level. Alternatively, a turn below the 1.5876 – the intersection of the 14.6% Fib expansion and the wedge floor – opens the door for a test of the 1.5720-57 zone (June 2013 floor, 23.6% Fib expansion).
We entered short GBPUSD at 1.6233and have since taken profit on half of our exposure. The rest remains open to capture any further downside momentum in the event 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