GBP/USD Retracement Scenario (May 24, 2013)

The pair rebounded off its recent lows and appears to be making a pullback to any of the Fibonacci retracement levels.

The falling trend line on the hourly time frame is still intact as the 61.8% Fibonacci retracement is in line with the former support level around 1.5175. Stochastic is pointing upwards, suggesting that the pair could head further north before resuming its drop.

If you’re planning on shorting this pair, set your stop above the trend line or the 1.5200 major psychological level. If the pair resumes its selloff, it could test its previous lows around the 1.5050 minor psychological support and possibly go for new lows closer to the 1.5000 handle.

By Kate Curtis from Trader's Way