GBP/USD backs away from major 1.5400 resistance

<p>GBP/USD (daily chart) has tentatively backed away from major resistance around the 1.5400 level. The past week has seen the currency pair test, retest, and […]</p>

GBP/USD (daily chart) has tentatively backed away from major resistance around the 1.5400 level. The past week has seen the currency pair test, retest, and consolidate right under this key barrier after having spent the prior two weeks rising from a base around the 1.4800 level, which was an approximate double-bottom low. The 1.5400 resistance is not only a major support/resistance level that has served as an important turning point several times in the past, it is also a 38.2% Fibonacci retracement confluence of the long and steep plunge that fell from just above the 1.6300 resistance in the very beginning of the year down to the low just above the 1.4800 support in March.

Having just made a tentative turn down from this 1.5400 resistance confluence, the pair is at a critical juncture. A subsequent breakout above 1.5400 could prompt a move towards strong further resistance to the upside around the 1.5600 level. But if the current turn back to the downside follows-through, a breakdown below 1.5250 support could prompt an expected bearish trend continuation down towards 1.5000 and 1.4800 once again, with a further potential bearish objective around 1.4500.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.