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Forex Analysis: GBP/USD Advances to Hit Strong Resistance

GBP/USD Daily Chart

GBP/USD (daily chart) has advanced to hit strong 1.6150 resistance after having rebounded off 1.6000 support early in the week. This occurs within a longer-term bullish trend extending back to the June 1.5250 region low, as well as a short-term bullish trend resumption from the mid-November 1.5825 region low. The short-term trend broke out above both the key 1.6000 level as well as a bearish resistance trend line extending back to the September 1.6300 area high, before retracing back to the 1.6000 level and bouncing off it with a hammer candle pattern. Having just reached and retreated from 1.6150 resistance, price can be considered to be at a critical juncture. In the event of continued upside momentum in line with the overall bullish trend, a breakout above 1.6150 could move price towards potential resistance around 1.6300, which was established in April and re-tested in September. If price is unable to breach 1.6150, the 1.6000 level may continue to serve as potential support to the downside.

James Chen, CMT
Chief Technical Strategist
FX Solutions

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James Chen

James Chen

James Chen is Chief Technical Strategist for City Index Group. He is also a Chartered Market Technician. He is the author of the books: "Essentials of Foreign Exchange Trading" (John Wiley & Sons, 2009) and "Essentials of Technical Analysis for Financial Markets" (John Wiley & Sons, 2010). Mr. Chen writes currency analysis, leads forex trading seminars and has appeared in numerous major financial media outlets, including CNBC, Bloomberg TV, Forbes, Reuters, Dow Jones, and the Associated Press.