FX.co ★ Weekly technical levels of GBP/USD for March 17-21, 2014

General idea about the pivot point.

• Resistance 3 and support 3 are considered to be clear indicators of the maximum range of extreme volatility, though it is possible to pass them through. Pivot lines work well in the sideways markets, as the prices are most likely to be between the resistance 1 and support 1 lines. Within a strong trend, the price is expected to be lower than the pivot point line and continue moving. If the breaking news released may affect the market, the price is likely to go straight through resistance 1 or support 1 and even reach resistance 2 and resistance 3 or support 2 and support 3. If the trend breaks resistance or support through, it is likely to result in a significant price movement, it is also referred to a breakout.

Observations:

• If the trend is of an upside character, then the strength of the currency will be defined as following: GBP is an uptrend and USD is a downtrend.
• Fibonacci retracement is used to determine accurate psychological levels of support and resistance. The period of time should be taken into account. Fibonacci is in a range trade; it looks like the trend is trapping and going up or down. If you sell or buy for a long term in this period, you will surely lose your profit.
• Stop loss should never exceed your maximum exposure amounts.
• As a rule, the market is highly volatile if the last day had a huge volatility.

Technical Levels:

• Projected high: 1.6895
• Strong resistance (sell limit): 1.6975
• Current pivot: 1.6654
• Strong support (buy limit): 1.6395
• Projected low: 1.6410