Technicals

(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend lines in red; horizontal support/resistance line in yellow; Fibonacci retracements in grey; 200-period simple moving average in light blue.)

7/07/2008 GBP/USD Price on the GBP/USD daily chart, as shown, has reached back down and touched the downtrend line that it broke out above in late June. This level is significant not only because it represents a relatively strong dynamic support/resistance line, but also because the level that price has reached as of this morning represents a key 61.8% Fibonacci retracement level (the low-to-high retracement span being measured from the swing low on 6/13/2008 to the latest high on 7/1/2008). Whether or not this level holds at this juncture is the big question. Because of the strength of support imposed by both the downtrend line and the Fibonacci retracement level, there is a slight bias towards a bounce at or near this level, in which case the obvious resistance to the upside resides around the 2.0000 level. Any clean breakdown, on the other hand, would target strong previous support around 1.9350.

James Chen

Chief Technical Analyst

FX Solutions

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