width=398(Chart courtesy of FX Solutions' FX AccuCharts. 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.)

10/07/2009 - GBP/USD - Price action on GBP/USD, a daily chart of which is shown, has continued in its relatively tight consolidation with a bearish bias after breaking down below a rough, expanded head & shoulders pattern. The current consolidation can also be seen as a rough inverted flag/pennant formation. The key downside support level to watch for is the important 1.5800 price region, which the pair has essentially respected since May. Any significant breakdown below this level could confirm a potential bearish reversal off the head & shoulders pattern, and target further support in the 1.5500 price region, and possibly further down around the 1.5300 price region. Upside resistance within the context of the current bearishness in this pair resides around the 1.6100 price region, which represents the top of the current consolidation.

James Chen, CMT
Chief Technical Strategist
FX Solutions

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