14.07.201512:55 Forex Analysis & Reviews: GBP/USD downward correction

Long-term review

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After an impulsive two-week rally up from 1.5160 to 1.5930, GBP/USD started to move lower. The wave down, started on June 18, resulted in a breakout of the uptrend trendline.

After the breakout, the pair immidiately nosedived to 1.5326. The price broke below the S1 (1.5515) and S2 (1.5417) suppor level taken from the Fibonacci levels applied to the trend-line breakout point. While support is broken, the GBP/USD is not going to test any highs. At the same time, the price is rejecting the R1 (1.5594) resistance level of 1.5600 that is a very strong phsycological level as well.

Overall mid-term trend is bearish and GBP/USD could be yet to test the major support area between S3 (1.5260) and S4 (1.5170). Consider selling GBP/USD this week while its price is near R1 (1.5595) targeting either S3 or S4 support levels. Only a daily close above R2 (1.5673) should result in resumption of the major uptrend.

Support: 1.5515, 1.5417, 1.5260, 1.5170

Resistance: 1.5594, 1.5673

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