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The British Pound weakened against the US Dollar as expected after prices produced a Bearish Engulfing candlestick pattern. The pair is treading water above support at 1.6260, the 50% Fibonacci retracement, with a break lower on daily closing basis targeting the 61.8% level at 1.6164. Alternatively, a reversal above the 38.2% Fib at 1.6356 exposes a rising channel bottom set from set from mid-December at 1.6448.
Three back-to-back indecision candles after a sharp selloff point to ebbing bearish momentum, hinting a bounce may be ahead. While this warns against betting on downward continuation, the absence of confirmation likewise suggests it is premature to enter long. We will remain flat for the time being.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com