GBPUSD: Rejection Of Lower Prices Turns Risk Higher

GBPUSD - A reversal of intra day losses on Tuesday saw GBP closing marginally higher at 1.6420 and was seen following through higher in early trading today. While the pair is short term vulnerable to the downside, with its current price development, risk is now beginning to shape up with eyes on the 1.6602 level, its Oct 29'09 high. On a clean invalidation of there further upside gains is likely towards the 1.6692 level, its Oct 23'09 high which must give way to relief the pair of its ST downtrend vulnerability and open the door for further higher prices towards the 1.6740 level, its Sept 11'09 high with an eventual loss of there setting the stage for a retarget of its YTD high at 1.7041. Beyond the latter will activate the resumption of its medium term uptrend on hold since Aug'09. We are cautious of our upside outlook for the pair nearer term as two resistance levels(1.6602 and 1.6692) must be broken to keep that view valid. On the other hand, supports are located at the 1.6366 level and the 1.6260 level, its Nov 03'09 low with a break targeting its Oct 30'09 high at 1.6124 level and then the 1.6000 level. Its daily stochasticsremains supportive of this view. On the whole, with rejection of lower level prices and a higher close seen, risk remains higher nearer term.