Following today’s release of disappointing UK Manufacturing PMI data, Sterling sold off sharply. Traders should be looking for a technical retracement to reenter at better levels.
Looking at the daily chart for the GBP/USD, Sterling was sold today and looks to have found support near the 20-day moving average at 1.6460. Today’s daily low came in at 1.6466.
The support level at 1.6430 could be an area of interest for technical analysts. This price level coincides with the late April low and a 38.2% Fibonacci retracement of the April move higher. Below this key area further support is found at the mid-April low of 1.6165, followed by the rising trend line off of the May 2010 lows which comes in today at 1.5970.
To the upside, the mid-April high at 1.6600 may prove to be resistive if only temporary. Traders should initially target a return to last week’s high at 1.6745, followed by the November 2009 high at 1.6875 and the 2009 high at 1.7042.
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Russell Glaser is a Currency Analyst with ForexYard. Russell provides analysis in the FX spot market by employing fundamental research methodologies. In addition to currencies, Russell closely follows the correlation between the Commodities market and the movement of equities. His writings have been published on the ForexYard Trading Blog and associated partner sites. Prior to joining Forexyard, Russell Glaser served as a management consultant in the financial services industry, advising Fortune 100 companies. Russell holds a degree in finance from the Fisher College of Business at The Ohio State University.
