Chart Of The Day: GBP/USD

10/15/2008 - GBP/USD - Price action on the GBP/USD daily chart, as shown, has been making what could be considered an upside correction or retracement after hitting a 5-year low late last week. This retracement has stalled just shy of reaching a key 50% Fibonacci retracement level that corresponds with a prior support/resistance level around the 1.7750 region. If there is any continued upside momentum on this correction, that 1.7750 region should serve as strong resistance to the upside. Indeed, oscillators like the displayed Stochastics are giving hints that overall momentum may potentially be to the upside, as they are just emerging from oversold. At the same time, though, price action in the last couple of days has been indicating that this pair is having a hard time making any sustained up moves. A failure in the current upward correction would thus be confirmed on a clean breakdown of the most recent uptrend support line (in green, currently in the 1.7250 region). In this event, further support to the downside resides around the 1.7050 region.

James Chen
Chief Technical Analyst

FX Solutions

IMPORTANT NOTICE: These comments are for information purposes only. Past results are not necessarily indicative of future results. Trading Futures, Options on Futures, and Foreign Exchange involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. The information contained on this email does not constitute a solicitation to buy or sell by FX Solutions,LLC., and/or its affiliates, and is not to be available to individuals in a jurisdiction where such availability would be contrary to local regulation or law.

(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend lines in red; horizontal support/resistance lines in yellow; 200-period simple moving average in light blue.)