UK January Mortgage Approvals had the highest reading since September 2007 and CBI realized sales soared to a 20-month high in February. The positive headlines from London helped GBP/USD attempt to recover the steady pullback that took price down to 1.6582. The bearish channel in red appears to have completed this pullback after price has respected the 38.2% Fibonacci retracement of the February low to high move. Key resistance remains the 1.6850 price barrier and major resistance lies at the psychological 1.70 level which also coincides with the 100-Monthly Simple Moving Average.
Price is finally starting to show some technical signs of relenting this continuously strong uptrend that has been in place since price made a key low at 1.4812 last July. On the intra-day charts price is facing this week’s high. The recent two-day rally is also testing the 50% Fibonacci retracement of the recent pullback. The overbought conditions on the daily chart also have often triggered a significant corrective move once price has not touched a key SMA for over a month.
The trade: Sell GBP/USD at 1.6730 with a stop loss at 1.6775 and a take profit at 1.6605. The Risk/Reward Ratio is just under 1:3.
Edward J. Moya
Technical Strategist
WorldWideMarkets Online Trading
