GBP/USD Retreats From 1.6255

GBP/USD (4-hour chart as of October 23, 2013) bounced off the 4-hour EMA 200 on October 17 and broke out above a trading range between the EMA 200 and the support/resistance line (bold blue line on chart). Price then surpassed the key 1.6123 level (arrow 2 on chart) mentioned in our October 16 analysis, to test the lower edge of the uptrend (bold green parallel lines on chart) that extended back to July 9.

Today, price retreated from a high of 1.6255 following the Bank of England minutes with little indication of interest rate hike projections. Current price is testing the 1.6123 mark for the second time, and it needs to hold 1.6123 for more upside momentum to invalidate a possible double top pattern, with the first top at the October 1 high (1.6260) and the second top at today’s high (1.6255).

Support levels below:

1^st support: 1.6123 (key support level)

2^nd support: 1.6055 (October 16 high)

3^rd support: 4-hour EMA 200

4^th support: 1.5890 (October 16 low)

Resistance levels above:

1^st resistance: 1.6260 (October 1 high)

2^nd resistance: 1.6340 (January 2 high)

3^rd resistance: upper edge of the uptrend channel