Studying Fibonacci Levels

It can help to study Fibonacci retracement levels in hindsight. We can see from the hourly chart of the Monday session’s move that price retraced as far as 61.8% before resuming the upward trend and breakout to new highs above 1.6400 and confirming a reversal of the downtrend in the GBP/USD currency pair.

Now when live trading, we don’t have the benefit of hindsight. When using Fibonacci levels, usually any retracements beyond 50% signals a reversal of the studied trend. Most trends will reverse after retracing more than 50% of the move. However, it is also prudent to know that 61.8% retracement can also occur and still the trend can be honored with no reversal taking place. This is the case here.

Cable now targets 1.6500, major whole number, large quarter point, and serious psychological level.