FXstreet.com (Barcelona) - The Sterling has extended recovery from Monday's 2-weeks low at 1.6130, to 1.6350 resistance which has capped Pound's rally and the pair trades at 1.6320 at the moment of writing.

On a wider perspective, Peter Rosentreich, technical analyst at ACM - Advanced Currency Markets observes the pound shaping a compound head and shoulders pattern: the head and shoulders on cable is likely to be a compound head and shoulders, where there are two shoulders on each side and two necklines, one slightly higher than the other. This has been confirmed this morning with a solid rally and short covering from 1.6188 up to the first resistance at 1.6340.

Furthermore, Rosentreich considers the current level as a good entry point: This is likely to provide a good short entry level for those playing the larger set of shoulders where the neckline sits at 1.5947 and in the event that it trades higher the pair should be capped by the downtrend and further resistance at 1.6435 in the short term.