GBPUSD: Though turning off lower prices in early trading today, GBP retains its downside bias having lost upside momentum at the 1.6234/39 levels and followed through lower on Tuesday. However, it now requires a decisive break and hold below its psycho level at 1.6000 to signal a recapture of the 1.5830 level, its Dec 30’09 low (though seen holding below the 1.6000 level as the time of this analysis). Below the latter level will set the stage for the resumption of its declines activated off the 1.6875 level towards the 1.5706 level, its Oct 13’09 low. A sustained break below there will see a 100% price retracement (from 1.5706-1.6875 levels) and open the door for additional downside towards its .50 Ret (1.3501-1.7041 rally) at 1.5273. Its daily RSI is bearish and pointing lower suggesting further downside. To reverse its current downside vulnerability, GBP will have to decisively overcome the 1.6234/39 level, its Dec 31’09/Jan 04’10 highs and then resume its recovery initiated at the 1.5830 level towards the 1.6409 level, its Dec 16’09 high where a break will expose its Nov 25’09 high at 1.6744 and then the 1.6875 level, its Nov 16’0-09 high. These levels should provide strong resistance if seen and possibly turn the pair back down.
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