(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 lines in yellow; chart patterns in dotted yellow; Fibonacci retracements in grey; 50-period simple moving average in light blue.)

3/05/2008 – GBP/USD – After breaking out above the prevailing downtrend channel a couple of weeks ago on the GBP/USD daily chart, as shown, price has consolidated in a rather unmistakable flag formation (represented on the chart by the dotted yellow chart pattern). Since flags often serve as relatively reliable continuation patterns, the current formation could be hinting at an impending continuation of the recent channel breakout. As of this writing, price has just tentatively broken through the flag to the upside, providing some indication of a possible impending upmove continuation. In the event that there is indeed continued momentum to the upside, as might be expected, the next major resistance resides around the 2.0100 region, and then at the underside of the previous uptrend channel (outlined on the chart by the parallel green lines).

James Chen

Chief Technical Analyst

FX Solutions

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