Weekly Report 23/04 -27/04/ 2012

The GBP/USD was able to approach our previous detected technical target of 1.6165 which represents 7-month high taking Stochastic to the overbought areas nicely as seen on the provided daily chart. We discussed in several occasions before that the pair frequently adopts favorable reactions to the signs appearing on momentum indicators and now we can notice some kind of weakness on Stochastic. Meanwhile, the solidity of 1.6165 may play a big role pushing the pair to the downside. Finally, a bearish butterfly pattern may form its PRZ during the coming hours. As a consequence, potential reversal might be seen during this week mainly targeting the psychological level of 1.6000 and a break of which will bring panic sell-off actions.

The trading range for this week is among key support at 1.5820 and key resistance at 1.6350.

The general trend over short term basis is to the downside, targeting 1.4225 as far as areas of 1.6875 remain intact.

Previous Report

RecommendationBased on the charts and explanations above our opinion is, selling the pair around 1.6165 targeting 1.5975 and stop loss above 1.6250 might be appropriate.