(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend lines in red; Fibonacci retracement levels in grey; 50-period simple moving average in light blue.)
2/20/2008 â€“ GBP/USD â€“ After recent false breaks above the original downtrend line on the GBP/USD daily chart, as shown, the pair has settled into a new, more relevant downtrend channel. The original downtrend line is represented on the chart by the dotted red line, while the new channel is represented by the solid red parallel lines. The most recent swing high on 2/14/2008 hit a combination of several different resistance factors before turning back down. Most importantly, price reached the top of the new downtrend channel, as mentioned. In addition, this coincided with the key 23.6% Fibonacci retracement level (the high-to-low retracement span being measured from the historical high on 11/9/2007 to the last low reached on 1/22/2008). And finally, this also coincided approximately with resistance from the 50-period SMA (in light blue). As of this writing, Cable has been dropping steadily away from this resistance, as might be expected from a technical perspective. With any further momentum to the downside below the last low of around 1.9335 (reached on 1/22/2008), price should target clear support at the bottom of the parallel downtrend channel. This bottom support line is relatively strong, as price has touched it and reversed at least 5 times since the lineâ€™s inception in November 2007.
Chief Technical Analyst
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