(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; Fibonacci retracement levels in grey; 200-period simple moving average in light blue.)

5/06/2008 – GBP/USD – Still very much in a long-term uptrend mode despite the recent waves of moderate dollar-strengthening, the GBP/USD daily chart, as shown, is currently in a critical price consolidation. After a relatively short run-up following a triple bottom earlier in the year (represented on the chart by the short yellow support line), price has consolidated in an extended falling wedge formation (represented by the converging red lines). Although the immediate run-up before the wedge was rather short, and an ideal falling wedge that serves as a continuation pattern would usually occur after a longer run, technical traders should be looking out for any clean breakout above the wedge to continue both the short-term and long-term upmoves. In the event of this breakout to the upside, major resistance resides first in the key 2.0100 region, and then further up around the underside of the previous uptrend channel.

James Chen

Chief Technical Analyst

FX Solutions

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