FXstreet.com (Barcelona) - The Sterling rallied about 250 pips on Tuesday reaching a 2-week high at 1.6585 to ease during Asian session reaching levels below 1.6500 at early European session, Jamie Saettele, technical analyst at DailyFX sees the Pound capped at 1.6500/1.6600 and shaping a H&S pattern on daily charts.

According to Saettele, the daily charts shows the Sterling giving shape to a Head and Shoulders formation projecting a drop to 1.5000: Rallies should be limited to the 1.6500-1.6600 area with the market in the process of attempting to carve out a major head & shoulders-like top on the daily chart that would ultimately project a measured move drop back towards 1.5000 over the medium-term.

Saettele points to 1.6115 level to confirm bearish bias: Look for a break below 1.6115 to help confirm bearish bias, while only back above 1.6700 gives reason for concern.