GBP/USD stalls under key 1.5500 resistance

<p>GBP/USD has stalled under the key 1.5500 level after a sharp rise to this major psychological resistance area last week. For the past five trading […]</p>

GBP/USD has stalled under the key 1.5500 level after a sharp rise to this major psychological resistance area last week. For the past five trading days, the currency pair has attempted to breach the 1.5500 level to the upside, but has failed to close above that level on each attempt so far.

The rise to 1.5500 began in early October, when GBP/USD bottomed out just above key support at 1.5100. In the process of the rise since then, the currency pair has broken out above a key downtrend resistance line extending back to August’s 1.5800-area highs, as well as both the 50-day and 200-day moving averages. These two moving averages have since converged to the downside, potentially forming an impending bearish cross signal.

GBP/USD Daily Chart

 

In the short-term, this bearish technical indication should only remain valid if the 1.5500 resistance level continues to hold and if there are no sustained breakouts above that level. Events for the remainder of the week that could affect whether or not this resistance holds begin with Wednesday’s speech by Bank of England Governor Mark Carney. There is also a speech that day by Federal Reserve Governor Jerome Powell. Any hints of hawkishness or dovishness in either speech may make a substantial impact on both the pound and the dollar. Finally, Thursday brings UK Retail Sales and US Unemployment Claims.

In the event that 1.5500 resistance holds, a retreat back down should find immediate support around the 1.5350 level, where the two noted moving averages have also converged. Any further downside move should target key support around 1.5100.

In the opposite event of an upside breakout above 1.5500, a bullish move should be met by further upside resistance around the 1.5650 level, last reached in mid-September.

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