December 17, 2013 – GBP/USD (daily chart) has pulled back significantly after having hit a high of 1.6465 one week ago, just short of its 1.6500 upside target. That high has served to this point as the culmination of a sharp bullish trend that has been in place since the July 1.4800-area low.
Looking at the year in review, GBP/USD displays a conspicuous “W”-shaped pattern for the span of 2013. This pattern began high around major 1.6300 resistance, dropped swiftly to a low just above 1.4800 support in March, rose to an intermediate peak around the key 1.5750 level in June, dropped back down to the 1.4800 support area in July, then finally rose sharply for the remainder of the year to end up, as of mid-December, just under the 1.6300 area where it began.
Despite the current pullback, the technical outlook for GBP/USD continues to carry an overall bullish bias in line with the strong prevailing uptrend, and could potentially continue to reach for higher highs. The near-term upside resistance target continues to reside around the noted 1.6500 level. Further to the upside, the key price objective to extend the bullish trend resides around the 1.6750 resistance level. Major downside support on a continued pullback resides around 1.6150 and then the 1.6000 psychological level.
James Chen, CMT
Chief Technical Strategist
City Index Group
Forex trading involves a substantial risk of loss and is not suitable for all investors. This information is being provided only for general market commentary and does not constitute investment trading advice. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any financial instrument and should not be used as the basis for any investment decision.
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