GBP/USD drops sharply to key support on dollar strength
James Chen June 20, 2013 8:59 PM
<p>GBP/USD (daily chart) has fallen further on marked dollar strength since the beginning of the week. This decline has brought the price down to key […]</p>
GBP/USD (daily chart) has fallen further on marked dollar strength since the beginning of the week. This decline has brought the price down to key support around 1.5400, a major price level that has served as both support and resistance many times in the past. The sharp drop down to this level occurred after the price expectedly turned down at the beginning of the week from strong resistance around the 1.5750 price level. This was also around the 61.8% Fibonacci retracement level of the steep downtrend from the high above 1.6300 at the very beginning of the year down to the March low above 1.4800.
Generally-speaking, GBP/USD has tended to behave technically, often moving rather accurately from key level to key level. The downside level to watch for any indication of a potential resumption of the entrenched downtrend remains at the current 1.5400 level. Any breakdown below 1.5400 should target downside support objectives around 1.5250 and then 1.5000, with the most important bearish objective being a re-test of the March 1.4830 low.