GBP/USD (daily chart) as of April 15, 2013 has tentatively retreated from key resistance around the 1.5400 price region, which is also right around the 38.2% Fibonacci retracement of the steep plunge from the 1.6300 area in the beginning of the year to the 1.4830 low in mid-March. The upside correction within the past month has been rather choppy and irregular, but resulted in a net rally of almost 600 pips to correct the plummet of more than 1500 pips in the prior two months.
After the double-test of the 1.5400 resistance area on Thursday and Friday of last week, price has turned to the downside today to respect the strong resistance around the 38.2% Fibonacci retracement level. Major support currently resides around the 1.5250 area, which is also in the vicinity of the 50-day moving average. A breakdown below that level would give some indication of GBP/USD attempting a continuation of the entrenched bearish trend, with further downside objectives around 1.5000 and 1.4800. A move above 1.5400 would invalidate this indication and likely further the bullish correction that has been in place for the past month, towards the 1.5600 price region.
James Chen, CMT
Chief Technical Strategist
City Index Group
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