GBP/USD Narrow Range Trading above 100-Day EMA

GBP/USD (daily chart as of July 30, 2015) retreated from the high of 1.5910/25 level (on June 22), which was right above the Fibonacci 50% retracement level (around 1.5880), from the low of April 13 in 2015 to the high of July 15 in 2014. The pair then declined for three weeks until it hit the 100-day EMA level (bold blue moving average line on chart).

Price broke down below the 100-day EMA on July 8 (red arrow 4 on chart), but once again immediately rebounded with follow-through long bullish candlesticks. The pair formed a very long bullish candlestick right above the 100-day EMA on July 14, showing strong support at this important level. 

Current price is trading in a narrow range between 1.5680 and the 100-day EMA (gray rectangle shape on chart). Watch closely the price action against the 100-day EMA. If this moving average remains as support and the short-term barrier of 1.5680 is cleared, price could trade higher to test 1.5815, and potentially 1.5910/25 level again. 

To the downside, if price cannot hold the 100-day EMA and the RSI stays below 50, more downward pressure would be expecting for the following trading sessions. Price could decline to test 1.5330, and potentially 1.5170 level. 

Support levels:

S1: 100-day EMA

S2: 1.5330 (July 8 low)

S3: 1.5170 (June 1 low)

Resistance levels:

R1: 1.5680 (multiple highs)

R2: 1.5815 (May 14 high)

R3: 1.5880/5925 (Fibonacci 50% retracement level/June 18 high)