GBP/USD has made another new high recently, as it broke slightly above the bullish pennant or flag pattern on its 1-hour time frame. However, it appears that the upward pressure isn’t that strong yet and the pair still has a chance at pulling back to an area of interest before moving further north.
Using the Fibonacci retracement tool on the latest swing high and low on the 1-hour time frame shows that the 50% Fib level lines up with a resistance turned support level. In addition, it is also around the 1.5550 minor psychological level, which suggests that it’s a good support zone.
Take note though that stochastic is not yet in the oversold region, which means that the pair could still dip a little lower before resuming its climb. Going long at 1.5550 with a stop below the 1.5500 handle or the lowest Fib level would yield a 2:1 trade with a target around 1.5650 to 1.5700.
By Kate Curtis from Trader’s Way