GBP/USD has made a stellar rally in the past few trading days, but it appears that the climb is losing steam and the pair needs to make a pullback.
On the 1-hour chart, it can be seen that the 38.2% Fib level lines up with the former resistance around the 1.6600 major psychological level. A retracement to this potential support zone could result to a bounce back to the previous highs. Stochastic is already moving out of the oversold zone though, indicating that bulls are eager to let the rally resume.
Going long at 1.6600 with a stop below the 61.8% Fib and a target of the previous highs around 1.6800 could mean a 1:1 return on risk.
By Kate Curtis from Trader’s Way