(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.)
9/14/2009 - GBP/USD - Unlike some other major dollar-based currency pairs, GBP/USD has not yet broken out of the prolonged sideways trading range that has characterized the pair for several months now. While a breakout above this trading range occurred in early August, price quickly re-entered the range and has traveled within it since then. With dollar weakening the theme for all of last week after the U.S. Labor Day, price once again revisited the top of the range (around the 1.6740 price region), but has retreated from this resistance level as of the beginning of the current week. The key upside event to watch for would be a strong re-break above the 1.6740 resistance region. In this event, price should target further resistance around the 1.7040 resistance level, which represents the high of the false breakout in early August and a 9-month high for the pair. And any breakout above that higher level should confirm an overall uptrend continuation. To the downside, a breakdown below the current short-term uptrend support line extending from the early September low would confirm a continuation of the current trading range, potentially targeting initial support in the 1.6100 price region.
James Chen, CMT
Chief Technical Strategist
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