GBP/USD (daily chart as of December 9, 2013) broke out above the key resistance of 1.6260 on November 27, and touched a high of 1.6440 on December 2. The candlesticks of both December 2 and 3 had longer upper shadows, indicating relatively strong resistance at the session highs around 1.6435/40.
It appears that price is currently consolidating after the breakout and forming a small flag-like continuation pattern (bold green lines on chart). This would be a valid pattern only if price can hold the key 1.6260 level or the daily EMA 20 that has been serving as strong support since November 15, and would be confirmed only if price clears 1.6440.
As long as price can hold above 1.6260, it should continue the recent upside momentum to move higher. In the event of price falling below the daily EMA 20 or 1.6260, the breakout of the prior trading range (1.5890-1.6260) would be considered a failure, and another leg down may be expected to test the support zone of 1.5890-1.5955 again.
Support levels below:1st support: daily EMA 20 or 1.6260
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: upper border of the flag
2nd resistance: 1.6435/40 (December 2 and 3 high)
3rd resistance: monthly EMA 200
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