GBP/USD at Critical Trading Juncture
06/23/2009 12:01 am EST
Price action on GBP/USD, a daily chart of which is shown, is currently entrenched in both a well-defined uptrend as well as a mature triangle formation. The uptrend is an accelerated one that began to get steeper in May, and has since been respected by at least four price touches.
The triangle has three touches to the upside and two to the downside, and is quickly approaching the triangle apex. This pattern occurs after price hit a high in the current uptrend, retesting the 1.6660 price region that was last reached in late October 2008.
Any strong downside break below the bottom border of the triangle, which would correspond approximately with a breakdown below the steep uptrend line, could eventually target further support around 1.5800, the lowest point in the current triangle. Any upside turn that results in a significant breakout above the triangle should meet immediate resistance around the noted 1.6660 high, and then further up around the 1.6800 price region.
By James Chen, Chief Technical Analyst, FX Solutions