GBP/USD Testing 1.6260 Support

GBP/USD (daily chart as of December 18, 2013) touched a high of 1.6465 on December 10, and then immediately retreated for five consecutive trading sessions to retest the previous resistance (now support) level around 1.6260. Price fell and overshot 1.6260 yesterday but managed to close above that level. Today price had a strong rebound from 1.6260 and as of this writing, has recovered all of the losses in the previous four trading sessions. This was typical of range trading behavior. Currently, price is trading in a range from 1.6260 to 1.6465.

It appears that the currency pair has broken out above the prior large trading range from 1.5890 to 1.6260. If price can hold above 1.6260, it would confirm the breakout and resume the prior strong uptrend that extends back to July. Note the significance of the daily EMA 20 support (bold red moving average line on chart). Yesterday, price closed below the EMA 20 for the first time since November 13, which was an early warning sign of weakening momentum. Price is now trading back above the EMA 20 again.

Support levels below:
1st support: 1.6260 (previous resistance level) or daily EMA 20
2nd support: support zone of 1.5890-1.5955
3rd support: 1.5750 (June 17 high) or daily EMA 200

Resistance levels above:
1st resistance: 1.6465 (December 10 high)
2nd resistance: monthly EMA 200