Thursday, May 26, 2011

GBP/USD ~ Update ~ 26 May 2011

Let's have a look at the cable:

In 2008 the GBP/USD declined from 2.10 to 1.35 losing about a third of its value within only one year. Since then it has recovered and is now trading at 1.63ish.

It's a bit difficult to define the long-term trend for the cable (down/sideways?) but there is a very strong resistance in the low 1.70's so as long as it holds I think the rally from 1.35ish is only a retracement of the big down move from 2.10ish.

There is a very nice wedge forming thus the medium-term trend is up as long as the lower trend line holds. We may see a rally into the big red resistance area next.
If the wedge breaks possible objectives are the 1.54-55 area and then 1.43-44ish.

We broke out of a downtrend channel yesterday thus the short-term trend is up. I think we could see a rally to 1.67 again (or even a bit higher to the upper wedge trendline (see medium-term chart)).