GBP/USD Finds Support at 1.5420 and Tests Short-Term Uptrend Line

GBP/USD (daily chart as of September 5, 2013) found temporary support at 1.5420 on August 28, one of the important support levels mentioned on our August 22 analysis. The candlestick of August 28 was a small bearish body with long lower shadow that formed right at 1.5420, indicating relatively strong support at its session low (blue arrow on the chart).

If we connect the July 9 low and the August 7 low, we get a short-term support line (bold green line on the chart). Price has been testing that line for seven trading sessions since August 28. The daily MACD is rising from above zero and the RSI is currently testing a support line from just above 50. Watch closely the significance of the mentioned short-term support line.

Short-term trading strategies:

Bullish if price can hold the short-term support line.

1^st resistance: 1.5715 (August 21 high)

2^nd resistance: 1.5750 (June 17 high)

3^rd resistance: 1.5840 (Feb 8 high)

Bearish if price breaks down below the short-term support line.

1^st support: 1.5420 (August 28 low)

2^nd support: 1.5300 or the med-term uptrend line (blue bold line on the chart)

3^rd support: 1.5200 (August 7 low)