FXstreet.com (Barcelona) - Pound's recovery from 1.5765 low on Monday has extended on Wednesday, as the Pound rallies about 150 pips in the day so far, reaching levels few pips below 1.6100; 0.82% above the dily opening price, although, according to according to Peter Ruud, technical analyst at Informa Global Markets, the pound might re-test recent lows.
The Pound could perform a temporary recovery, according to Ruud, although it should retest recent lows in order to build an accumulation pattern: While the oversold nature of the Pound merits a temporary recovery, a retest of the recent lows may be required to build a formidable accumulation pattern. If a weak (slow-moving) counter-rally pauses at the 38.2, 50, 61.8 or 78.6% retracement level (from this week's recovery high to the swing low), a possible higher low could be in the cards.
On the downside, below this weeks low, Ruud advanced the possibility of a double bottom pattern: In the event of a marginal breach of this week's low, a possible double bottom pattern could be in store and the GBP should be accumulated. If, however, the current recovery begins to stall and is followed by an aggressive drive towards the low, caution is advised and suggests a broader correction is in place.