(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; downtrend lines in red; uptrend lines in green; chart patterns in magenta; 50-period simple moving average in light blue.)
2/04/2009 – GBP/USD – Price action on the GBP/USD daily chart, as shown, is currently in the midst of a bullish retracement within the context of a general downtrend. This bullish retracement has been forming within the past two weeks after price hit a fresh 23-year low almost precisely at 1.3500 in late January. Clear triggers for potential trading opportunities include any breakdown below short-term uptrend support on the current bullish retracement. In this event, price should meet further support in the 1.4050 level, a breakdown of which could target extreme support in the 1.3500 region, the noted 23-year low. Other significant events would be a pronounced bounce down off the downtrend resistance line extending from the swing high on 10/30/2008, as well as any strong breakout above the same line. In the event of a breakout above that downtrend resistance line, further resistance to the upside resides in the 1.5250 region.
James Chen, CMT
Chief Technical Strategist
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