GBP/USD Threatening to Break Below Short-Term Range

Since October 21, the GBP/USD (British Pound and U.S. Dollar) has been battling within a range of 1.58757 (November 3rd) and 1.61651 (October 30). The pair is currently threatening to break out of that abbreviated range. Today has proven to be an extremely busy day for the GBP/USD, fluctuating between gains and losses throughout most of the session. More importantly, the GBP/USD briefly broke below the range outlined above, dropping to an intraday low of 1.5867. Bears could not hold the position, however, as the pair quickly jumped back above 1.59. The GBP/USD's current trading price is almost directly in the middle of the pair's 52-week high and low (High – 1.6745; Low- 1.5271) Therefore, a break of the current range, whether above or below is very relevant, as it may be an early indication as to the long term direction of the pair.

Primary support lies in between 1.58757 and 1.58895. Today's move marks the fifth attempt to break below this support band since October 24th.

As the six month daily chart at the bottom of the article shows, the GBP/USD is currently trading at 1.5908, just above the support level noted earlier. Due to the inability of shorts to keep the pair below that level in today's session, the breakout direction remains unclear, but currently favors the bears given the close proximity of the support area. The pair has already had several false, short-term range breakouts. Therefore, a US market

outside of the range will provide a clearer indication of future direction than an intra-day penetration of the high or low. Should the pair manage to close below the outlined range, a move to 1.56309 would appear likely, as that is the pair's next closest area of support. Beyond that, no support comes into play until the 52-week low of 1.5271. Conversely, should the GBP/USD manage to break above its range, it has no resistance until 1.64528. Beyond that price, no resistance forms until the 52-week high of 1.6617. As you can see, a breakout of this range (in either direction) will have significant consequences and will likely lead to a large percentage move in the corresponding direction.

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. If the GBP/USD rises, the FXB will benefit. Should the pair decline, look out below.