GBP/USD Breaks December Uptrend- Support now the BattlegroundBritish Pound / U.S. DollarFOREXCOM:GBPUSDFOREXcomThe Sterling rally exhausted just ahead of resistance into the start of the year at 1.3573/93- a region defined by the 78.6% retracement of the September decline and the May / August swing high. The pullback extended nearly 1.3% off the highs before rebounding into the start of the week with an outside-day reversal off the 200-day moving average on Monday defining the weekly opening-range. Look for a breakout of this candle on a daily close basis to drive the next move in GBP/USD. GBP/USD is trading within the confines of a descending pitchfork extending off the December / January highs. Note that last week’s break of the December uptrend (red) has been tested as resistance over the past two-days and suggests a deeper correction may be underway here. Yearly open resistance is eyed at 1.3474 and is backed by near-term bearish invalidation at the 61.8% retracement of the monthly range and the monthly high-day close (HDC) at 1.3500/02. Ultimately, a breach / daily close above the October high at 1.3528 is needed to put the bulls back in control here with key resistance steady at 1.3573/93. Initial support rests with the weekly opening-range low / 200-day moving average at 1.3391/95. More significant support objectives are seen at the September low-day close (LDC) and the 38.2% retracement of the November rally at 1.3345/55 and the 100% extension of the monthly decline at 1.3318. Both levels represent areas of interest for possible downside exhaustion / price inflection IF reached. Losses surpassing this threshold would suggest a more significant high is in place and a larger trend reversal is underway towards the November high at 1.3269. Bottom line: A break of the December channel is threatening a larger pullback here with the weekly range set just above the 200-day moving average. From a trading standpoint, rallies should be limited to 1.35 IF price is heading lower on this stretch with a break below 1.3392 needed to fuel the next leg of the decline. -MB