GBPUSD: Looks To Build On Hammer Formation

GBPUSD - With a hammer formation on Friday halting its declines triggered off its Nov 16'09 high at 1.6875, GBP has immediate upside risk and looks to build on that strength though seen hesitating in early trading today. A follow-though higher is expected to target the 1.6744 level, its Nov 25'09 high with a breach exposing the 1.6875 level, its Nov 16'0-09 high. An eventual loss of there will leave the 1.7041 level, its YTD high as the next upside target and then its .50 Ret (2.1160-1.3501 decline) at 1.7314. The risk to our analysis will be a convincing violation of the 1.6267 level, its Nov 27'09 low and its Oct 26'09 low at 1.6249 where a cap is expected but if that fails, its Oct 30'09 high at 1.6124 level will be targeted ahead of a major swing low at the 1.5706 level, its Oct 13'09 low. This level preserves GBP's medium term uptrend outside its LT rising trendlinedrawn from the 1.3655 level in Mar'09. On the whole, with temporary halt in prices seen, GBP should build on that strength and recover higher with eyes on its broader medium term trend resumption.