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GBP/USD Resistance Turned Support (December 9, 2013)
GBP/USD has failed to breach the 1.6400 major psychological level last week, as strong US data kept the Greenback afloat. However, UK fundamentals are also very strong, which suggests that GBP/USD might simply need to pull back first before resuming its rally.
On the 4-hour time frame, it can be seen that the 1.6250 minor psychological level, which was a former resistance area, is in line with the 38.2% Fibonacci retracement level. Stochastic is still moving down, which suggests that traders could push GBP/USD a little lower before bulls jump in.
A long order at 1.6250 with a stop below 1.6200 and a target of 1.6400 could be a 2:1 return on risk. Adding every 75 pips could turn it into a 3:1 trade.
By Kate Curtis from Trader's Way
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