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Fan Yang

GBP/USD Retreats Sharply, but Support is Right There

Last week, we saw the GBP/USD form a price top with a conservative target to 1.26. To start this week, price indeed followed through and is closing in on 1.26. 

GBP/USD Daily Chart

(click to enlarge)

- Around 1.26, there is the 200- and 100-day simple moving average as well a a previous resistance pivot that might act as support.
- I think price will be sticky around here, especially ahead of the FOMC statement on Wednesday (6/14).
- We should really monitor what happens after Wednesday's event risk. 
- I would want to see which side of 1.26 price closes out the week on. 
Bullish Scenario:
- If it is above 1.26, I would anticipate a rally to test support pivot around 1.2760 and another pivot around 1.2850. 
- Then a break above 1.2850 should liberate the bullish outlook.
Bearish Scenario:
- A close below 1.26 should put pressure towards 1.25, where we might see some support. 
- Below 1.25, the next key support will be around 1.2320-1.2330. 
- A break below 1.2320 will invalidate the April/May bullish breakout and revive the bearish outlook in GBP/USD. 
- In this bearish scenario, there will be pressure back to the 2016 low (1.19-1.20).

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