Following the late April high in GBP/USD the subsequent slip back found good support from a key 38.2% area, with recovery then triggered. But after recent resistance the key support could once more come under scrutiny.

  • WEEKLY CHART: The previous break through falling resistance was bullish –but after the 50% recovery level was neared the market slipped. Support from the old falling return line has held so far.
  • DAILY CHART: Note how effective dual support from the 38.2% retracement and channel base projection was. The 1.5785 38.2% level remains a key level and a violation of this would signal a more prolonged correction phase underway. Meanwhile the recent bounce found resistance around the rising old support/return line which we highlighted in the FX Specialist Guide. These lines can be very effective technically, so a pullback from here is no surprise. A drop back to the 38.2% would be a sign of weakness, raising expectations of a break lower.

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