Nick Nasad
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GBP/USD - Important Test of Support at 1.57 Sees Initial Rejection

The GBP/USD pair is at an important juncture, as are several other pairs. Here's my last look at the GBP/USD from last week.

  1. We test a 2 1/2 week high above 1.57.
  2. This pair has been in a nice uptrend throughout August, with 2 main retracements.
  3. While we had bullish the 21/55 EMA's line up in a bullish structure during the first half of August, the picture turned sideways more recently. However, we have another bullish crossover (21 crossing above the 55) which could suggest further upside momentum.
  4. Of note, the 55-EMA acted as support most recently.

The question is fairly simple. Will this important resistance level hold and we see another retracement. In that case, we would have the potential for a double top pattern to emerge.

However, if the pair is unable to hold the line here, and USD weakness continues throughout the week, we may see the resistance break, in which case we have to look at the daily chart for some topside targets. 

  • If we have a break to the topside, the levels to the topside include the 61.8% retracement of the downswing from 1.6380 to 1.4830, which comes in around 1.5790.
  • Above that I would look for the 1.5830 pivot which was an old level of support turned to resistance.
  • If resistance holds, then we may be looking at a run towards 1.56 and then 1.5560.

- Nick