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Talking Points:
- GBP/USD Technical Strategy: Flat
- Support: 1.7048, 1.6960, 1.6818
- Resistance:1.7139-53, 1.7191-226, 1.7285
The British Pound is edging downward against the US Dollar as expected after prices produced a Hanging Man candlestick bolstered by negative RSI divergence. A break below the 14.6% Fibonacci retracement at 1.7048 on a daily closing basis initially exposes the 23.6% level at 1.6960. Resistance is in the 1.7139-53 area, marked by a falling trend line and the 23.6% Fib expansion. A reversal above that opens the door for a test of the 1.7191-226 zone, bracketed by the July 15 high and the 38.2% expansion.
Risk/reward considerations argue against entering short with prices trading in close proximity to support. On the other hand, the absence of a defined bullish reversal signal suggests taking up the long side is premature. We will remain flat for now.
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Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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