(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)
6/03/2010 - GBP/USD - Price action on GBP/USD, a 4-hour chart of which is shown, has just respected a key downtrend resistance line extending from the late April high. This occurs within the context of a strong long-term downtrend, and comes on the heels of a bullish correction beginning in late May. Traders following the long-term and medium-term bearish trend are looking for potential downside trading opportunities where the downtrend may continue after the current bullish correction/pullback exhausts itself. One potential area where a downtrend continuation may begin is on a breakdown of the short-term uptrend support line that represents the noted bullish correction/pullback. In the event that this trendline is broken significantly to the downside, a major bearish support target resides around the key 1.4250 price region, which represents the strong long-term support low (in the region of a 13-month low) established approximately two weeks ago.
James Chen, CMTChief Technical StrategistFX Solutions
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