GBP/USD Bounces off 1.6600 With Limited Strength

GBP/USD (daily chart as of February 26, 2014) broke out above strong resistance of 1.6600 on February 12, and reached a high of 1.6820 on February 16. Price then fell for five consecutive trading sessions until it hit the 1.6600 mark (now as support) again on February 24 and then rebounded right below 1.6600 to trade higher for two sessions.

The rebound also occurred right at a bearish support line connecting the lows from February 18 to 21 (red trend line on chart). The expanded GDP number from the U.K. also contributed to the pound’s advance versus the U.S. dollar. The Gross Domestic Product (QoQ) increased by 0.7%, and the economy expanded by 2.7% from a year earlier, which is the most in about six years.

However, it appears that the pair’s recent bounce is much weaker than expected, with a candlestick that has a long upper shadow attached to a rather small real body yesterday. If price is capped by 1.6725 (the high for both February 21 and 25), it could turn down to test 1.6600 and potentially the mentioned bearish support line again.

Support levels below:
1st support: 1.6600 (multiple highs and lows)
2nd support: the bearish support line or daily EMA 50
3rd support: daily EMA 100

Resistance levels above:
1st resistance: 1.6725 (February 21 and 25 high)
2nd resistance: 1.6820 (February 16 high)
3rd resistance: 1.7000 (psychological level)