After some struggle against the 55-day EMA, GBP/USD ultimately broke that resistance and closed above it. The high of this upward move was 1.5282.
GBP/USD retracements and 55-day EMA
Isn't it interesting that this high where some resistance was seen was also the 50% Fibonacci retracement of the downward move from 1.5751 to 1.4813? Not only this level brings in the resistance of the 50% retracement but is also slightly below 1.5304 which had proved to be a strong resistance earlier.
But what if both these resistances are broken?
GBP/USD retracements and 200-day SMA
If both these resistances are broken then the next level will have the combined forces of the resistance of 61.8% retracement and the 200-day moving average. The current 200-day SMA is at 1.5404 i.e. just 22 pips above the 61.8% retracement level.
Longer view of the price action w.r.t. the 200-day moving average
Lets also have a peek into the important economic releases from the U.K. and The U.S. during the last week.
Recent Economic Releases
Comparative weight on the basis of last week's economic releases:
What can we Expect
On the upside if there is a decisive break of 1.5304 then we will expect further gains towards 1.5392/1.5404. This zone is expected to be a very strong resistance because of the 61.8% retracement, 200-day moving average and the approaching 1.5500 level. Even if a break of this resistance zone takes place a stronger resistance will be expected near 1.5477.
Connect with the author at Google: +Himanshu Jain.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.