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(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; 50-period simple moving average in light blue.)
Price action on GBP/USD, a daily chart of which is shown, has made a substantial breakdown of a key uptrend support line extending from the March lows. This breakdown has occurred as of Monday (8/17/2009) morning, and follows on the heels of a consolidation right above the trend line.
It also coincides with a breakdown of the 50-period simple moving average, which has provided valid support for the pair since late March. If the current breakdown proves to be true, and follows through to break the prolonged consolidation in the pair, a key support target to the downside resides around the general 1.6000 price region, and then subsequently further down around the 1.5750 price region. Strong upside resistance resides in the 1.6660 price region.By James Chen, chief technical strategist, FX Solutions
