FX.co ★ Technical analysis of GBP/USD for January 08, 2016

Trading recommendations:

• According to the previous events, the price of GBP/USD is going to move between the levels of 1.4665 and 1.4532. The resistance has set at the level of 1.4656 (1.4686: 38.2% Fibonacci retracement level). So, sell below the level of 1.4665 which represents the resistance in H1 chart with the first target at 1.4579, then the trend will be able to continue towards the level of 1.4532 in order to test the double bottom. Notwithstanding, the stop loss should be set at 1.4750.

Notes:

• If the trend is of an upside character, then the strength of the currency will be defined as follows: GBP is an uptrend and USD is a downtrend.
• Fibonacci retracement is used to determine accurate psychological levels of support and resistance. The period of time should be taken into account. Fibonacci is in a range trade; it looks like the trend is trapped and going up or down. If you sell or buy for a long term in this period, you will surely lose your profit.

Tips:

• R3 and S3 are considered to be clear indicators of the maximum range of extreme volatility, though it is possible to pass them through. Pivot lines work well on the sideways markets as the prices are most likely to be located between the R1 and S1 lines. Within a strong trend, the price is expected to be lower than the pivot point line and continue moving. If the breaking news released may affect the market, the price is likely to go straight through R1 or S1 and even reach R2 and R3 or S2 and S3.