(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; 50-period simple moving average in light blue.)

8/10/2009 € GBP/USD € Price action on GBP/USD, a daily chart of which is shown, has made a dramatic bearish correction after hitting a 9-month high of 1.7040 on an upside breakout last week. As of Monday (8/10/2009), this bearish correction has erased all of the gains made on the strong breakout above both the 1.6740 level as well as a short-term downtrend resistance line extending from the early June swing high. Currently, continued bearishness is approaching a key uptrend support line extending from the March low. If this trendline is respected, price could potentially bounce at or near the line to target the 1.7040 resistance high once again. If this trendline is breached significantly to the downside, a clear longer-term support target resides around the 1.5750 price region, which also represents a 38.2% Fibonacci retracement of the entire bullish trend from the March low to the 9-month high reached in early August.

James Chen, CMT
Chief Technical Strategist
FX Solutions

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