GBPUSD: Halts Declines, Prints Hammer Candle
GBPUSD - The pair halted its declines triggered off its Nov 16'09 high at 1.6875 on Friday after reversing an intra day weakness from the 1.6267 level to close lower at 1.6499. Although this did not stop GBP from closing marginally lower on the weekly time frame, the presence of a hammer formation(bottom reversal signal) now seen on the daily chart is expected to turn the immediate focus higher with a close back above its broken ST trendline(seen clearly on the daily chart) likely to clear the way for further upside towards 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 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 trendline drawn 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.