By Russell Glaser – Price action combined with a Fibonacci retracement level that coincides with a big round number should serve as traders’ target for the GBP/USD.
Looking at the weekly chart, traders should notice a few things from the recent price action. The bullish correction from May to August made a 61.8% retracement of the previous bearish trend that begins at the height of the pair in August 2009. The pair failed to breach this level twice and fell back to the 38.2% retracement level at 1.5300.
Following the drop to the 38.2% level, the GBP/USD made a bullish engulfing candlestick pattern the previous week and closed just shy of the 50% Fibonacci retracement level.
Barring any surprises on Friday, we should get a close above the 50% Fibonacci level at 1.5635.
This will allow for a potential price move to the 61.8% Fibonacci level and a target at the height of the May to August move at 1.5600. Many traders are psychologically drawn to big round numbers and therefore will set their sights as well as take profit levels near this area.
Support levels can be found in a range near 1.5520 followed by the 38.2% Fibonacci retracement level at 1.5300.
Forex Market Analysis provided by ForexYard.
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