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Forex Analysis: GBP/USD Range-Trading off 8-Month High

2013-09-25-GBPUSD

September 25, 2013 – GBP/USD (daily chart) continues to trade in a relatively tight range just above the 1.6000 psychological level after coming off the 8-month high of 1.6161 that was established just one week ago. This range represents a pullback/consolidation within the context of the steep bullish trend that has been in place since the double-bottom reversal from the 1.4800 price region in July. Since the noted 8-month high was reached mid-week last week, the pair has fluctuated within a flag/pennant-like pattern consolidation between 1.6150 resistance and 1.6000-area support, and appears to be building up for a potential breakout.

If it is a true flag/pennant pattern, the bias is towards a trend continuation to the upside on a pattern breakout, which would have a primary price objective around the major 1.6300 resistance region. In contrast, an extension of the current pullback would be indicated on a substantial breakdown below 1.6000, which could drop price back down towards key support around the current uptrend support line and the 1.5750-1.5825 support zone.

James Chen, CMT
Chief Technical Strategist
City Index Group

 

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James Chen

James Chen

James Chen is Chief Technical Strategist for City Index Group. He is also a Chartered Market Technician. He is the author of the books: "Essentials of Foreign Exchange Trading" (John Wiley & Sons, 2009) and "Essentials of Technical Analysis for Financial Markets" (John Wiley & Sons, 2010). Mr. Chen writes currency analysis, leads forex trading seminars and has appeared in numerous major financial media outlets, including CNBC, Bloomberg TV, Forbes, Reuters, Dow Jones, and the Associated Press.