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March 12, 2014 – GBP/USD (daily chart) has fallen back down to its 50-day moving average in a modest pullback this week. This pullback occurs after a consolidation that followed a new four-year high at 1.6821 that was reached just three weeks ago in mid-February. Despite the pullback, the currency pair continues to trade within a major bullish trend that extends back to the 1.4800-area double-bottom low in July of 2013. Having declined on Wednesday to hit a low of 1.6567, which came short of reaching down to a major 50% Fibonacci retracement level, GBP/USD subsequently gave some indication of a small and tentative rebound from its 50-day moving average.

If price action is able to establish stable support around the current lows, the currency pair could be poised for a resumption of the bullish trend after the current price dip. In this event, upside targets continue to reside around 1.6750 and then a re-test of 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 alternate event of a breakdown below the 50-day moving average, the major downside support target resides around the 1.6300 level.

James Chen, CMT
Chief Technical Strategist
City Index Group


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