February 25, 2014 – GBP/USD (daily chart) has attempted to advance again this week to regain some of the ground lost on its recent pullback from the four-year high of 1.6821, which was just established early last week. That pullback hit a low of 1.6582 on Monday, which was also around the 38% retracement of the most recent bullish run, before making a tentative rebound. This occurs within the context of a strong bullish trend that extends back to the July 2013 low around 1.4800. Despite having dipped below its 50-day moving average in early February, the subsequent sharp rally has placed the currency pair far above both its 50-day and 200-day moving averages, indicating a continued bullish bias.
To the upside, the 1.6750 level continues to serve as major resistance. A re-break above that level would put the currency pair on track to re-test the noted four-year high of 1.6821 – a breakout above which would confirm an uptrend continuation with a further upside target around the 1.7000 level. In the event that the pair pulls back further, below the noted Monday low of 1.6582, key support further to the downside resides around 1.6500, which is also the current level of the 50-day moving average.
James Chen, CMT
Chief Technical Strategist
City Index Group
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