GBP/USD has recently made a strong convincing break past its yearly highs at the 1.7000 major psychological level, indicating a continuation of the long-term rally. However, price has retreated back to the 1.7000 area after reaching highs past the 1.7060 levels.
Stochastic is also exhibiting a bearish divergence, which indicates trend exhaustion. The technical indicator is currently pointing down from the overbought level, which means that bulls might not be ready to push the pair higher anytime soon. This could mean that a pullback near the broken resistance area is in play.
Going long at the 1.7000 level with a stop below the 61.8% Fibonacci retracement level at 1.6975 could yield a high return on risk if one aims for new highs. Moving the stop to entry once price tests the latest resistance at 1.7060 could be a good way to protect profits.
By Kate Curtis from Trader’s Way