GBP/USD Approaching Strong Resistance Zone

GBP/USD (daily chart as of March 28, 2014) rebounded right from the daily EMA 100 on March 23, followed by four consecutive white candlesticks. On March 26, it broke out above a temporary short-term downtrend line connecting the highs since March 7.

The rebound is relatively strong due to the strong support at the daily EMA 100, which has been in place since late 2013. Recent improving retail sales and GDP data from UK also contributed to a higher GBP versus the US dollar this week. However, the pair is still unable to clear 1.6670, which is the last significant high point before the early February surge.

Current price is now facing multiple resistance levels above, including the downtrend resistance line connecting the highs since February 16 (line 1 on chart), and the resistance zone from 1.6650/70 to 1.6725. If price fails to clear the barriers, it could turn down to test the daily EMA 100 once again. Only a break to the upside out of the resistance zone would negate this bearish outlook.

Support levels below:

1st support: daily EMA 50

2nd support: daily EMA 100

3rd support: 1.6250 or daily EMA 200

Resistance levels above:

1st resistance: 1.6650/70 (March 19 high / January 24 high)

2nd resistance: 1.6725 (February 21 and 25 high) or line 1

3rd resistance: 1.6820 (February 16 high)