GBP/USD – Two Resistance Down, One to Go

Previous: GBP/USD - One Resistance Pivot Down; Two to Go (9/11)

GBP/USD Daily Chart 9/14/2012 7:35AM EDT

Breakout: The GBP has taken out another resistance pivot noted in the last update. The 1.6165 resistance was key, not only as a a pivot from 10/31/2011, but also coincident with a declining trendline that back to the 2011 high of 1.6757, made in April that year. Furthermore the break pushed above 61.8% retracement of the 2011-2012 bear run.

Structure: The daily chart above also shows that the market is accelerating so fast, the projected, already rising channel resistance could not hold it. In Elliott Wave terms, this appears to be a wave 3 type of rally where the June and July, choppy rally was probably part of wave 1 and 2.

As you should know by now, this rally is mainly on the back of QE3 expectation affirmed by Bernanke and the Fed yesterday (9/13).

Key Resistance Ahead: Looking at the weekly chart, we see that the next pivot is at 1.63. This is the last of the 2012 resistance pivots (the 2012-high), which was also the 2010 high. Given some elbow space, 1.63 will be a key level for now. A break above that exposes the 2011 high of 1.6757, though there will be some challenges along the way.

GBP/USD Weekly Chart 9/11/2012

Fan Yang CMT is a trader, educator and a Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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