Two weeks ago, I mentioned that the key rejection around the critical resistance 1.6800 area will open the door for a deeper pullback possibly towards 1.6457. Price did weaken and made a key low at 1.6462 yesterday which was just five pips away from a downward target from the March 11th post. With the bullish Gartley pattern in play, a rebound may target either the 23.6% Fibonacci retracement level of the C to D leg at 1.6538 or the 38.2% Fibonacci level which resides at 1.6585.
The daily chart above highlights that price may also be establishing a bearish channel that may support a move towards the 100-day SMA, which is currently at 1.6423. If price accelerates beyond that point major support will come from the key pivot level at 1.6250.
The trade: Sell GBP/USD at 1.6580 with a stop loss at 1.6630 and a take profit at 1.6380. The Risk/Reward Ratio is just under 1:4.
Edward J. Moya
WorldWideMarkets Online Trading