Click to Enlarge
(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)
Price action on GBP/USD, a daily chart of which is shown, has continued progressing sideways within the converging triangle consolidation that has been in place since the beginning of the month. This continued consolidating price action occurs within the context of a steep uptrend (extending from the late-April lows) which has not been broken as of yet.
Therefore, the current technical bias, in line with the strong current trend, is leaning towards a potential breakout to the upside of the triangle pattern. In the event that this triangle breakout occurs, an uptrend continuation would still not be confirmed unless a further breakout above the 1.6660 uptrend high occurs as well. In this event, the next major resistance target immediately above that high resides around the 1.6800 region. And, any breakout above that level should carry substantial bullish significance for the pair, potentially confirming a large, rounded-bottom pattern.
To the downside, below the steep uptrend support line, strong further support resides around the 1.5800 region, the last major swing low within the current uptrend.
By James Chen, Chief Technical Strategist, FX Solutions
