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- GBP/USD Technical Strategy: Flat
- Support: 1.6969, 1.6896, 1.6832
- Resistance:1.7053-62, 1.7176, 1.7274
The British Pound dropped the lowest level in a month against the US Dollar having turned lower as expected after showing a Hanging Man candlestick with negative RSI divergence. A break below the 23.6% Fibonacci retracement at 1.6969 on a daily closing basis initially exposes a rising trend line set from early February, now at 1.6896. Resistance is in the 1.7053-62 area, marked by the 14.6% Fib and the June 19 high. A reversal above that opens the door for a test of 1.7176, the July 2 top.
Risk/reward considerations argue against entering short with prices trading in close proximity to 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