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GBP/USD 1H Chart 7/19/2012 7:10AM EDT

GBP/USD

The GBP/USD consolidated this week as is tested a declining trendline that connected 6/20 and 7/2 highs. The 1H chart shows price action was in a triangle, and the RSI was stuck between 40 and 60. The GBP/USD broke above this congestion pattern during the 7/19 European session, pushing price to 1.57, and the 1H RSI above 60.

In the very short-term, this breakout opens up the 1.5726 and 1.5780.If we get resistance from 1.5780 and the market falls, it will be interesting to see if the market will respect the broken pattern as support.

Visually, if the market can stay above the middle of the pattern around 1.5560, I think the bulls are still in charge. It would be even more clear if it stays above 1.56, and the 200SMA in the 4H chart. In this case, we can look for a more aggressive bullish outlook beyond the very short-term.

A more aggressive bullish continuation scenario takes the previous rally and projects it from the start of this current bull run from about 1.54. This swing projection targets 1.5890.

GBP/USD 4H Chart 7/19/2012 7:13PM EDT

GBP/USD

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

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.