GBP/USD closed yesterday with a bearish pin bar candle, showing considerable weakness in the price action. The pair is expected to test the long term channel support in the short to medium term before resuming further upside rallies. The market sentiment remains very bullish due to repeated Higher Highs and Higher Lows in the recent moves.
As of this writing, the pair is being traded near 1.6775. A hurdle may be seen around 1.6822, the swing high of the previous rally, ahead of 1.6841 that is the intraday high of yesterday. A break above 1.6841 will incite renewed buying interest, threatening the 1.7000 handle.
On the downside, the pair is expected to find a support near 1.6689, the 23.6% fib level, ahead of the 1.6600 handle that is the 38.2% fib level. A break and daily closing below the long term channel support will push the pair into bearish territory, opening doors for a deeper correction towards the 1.6250 area.
UK Retail Sales
Next week the National Statistics department of the UK is due to release the retail sales report for the previous month. According to median projection of different analysts, the retail sales declined by 0.4% last month as compared to 1.7% increase in the month before, worse than expected actual outcome will be seen as bearish for GBP/USD and vice versa.
US Housing Report
On Tuesday, the US National Association of Realtors is due to release the existing house report. According to average forecast of different analysts, the number of existing houses rose to 4.55 million in March as compared to 4.60 million in the month before, better than expected actual reading will be considered bearish for GBP/USD and vice versa.
Selling the pair around the current levels seems to be a good strategy. The stop should be placed just above the bearish pin bar candle while the target could be around 100 pips.