(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend lines in red; chart patterns in yellow; Fibonacci retracement levels in grey; 50-period simple moving average in light blue.)

4/08/2008 GBP/USD Price action on the GBP/USD daily chart, as shown, has just tentatively poked down below a descending triangle. This triangle is outlined on the chart in dotted yellow. Like all triangles, this one represents a price consolidation with progressively diminishing volatility until a break in either direction occurs. Though it is not a rule, this break is most often in the direction of the prevailing trend. In the case of this current Cable daily chart, this tentative break, if there is indeed continued follow-through to the downside, can certainly be seen as moving in the direction of the medium-term downtrend. The bottom line of the triangle has additional significance in that it represents a long-term, oft-visited horizontal support/resistance level, and it also coincides approximately with a key 38.2% Fibonacci retracement level (the low-to-high retracement span being measured from the double-bottom swing low on 2/20/2008 to the top of the triangle on 3/14/2008). In the event of additional downside follow-through on the triangle break, major support resides in the region of the previous double-bottom low (short yellow line) around 1.9350. A breakdown of this further support level will also confirm a major pullback-continuation down.

James Chen

Chief Technical Analyst

FX Solutions

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