Chart Of The Day: GBP/USD

12/03/2008 - GBP/USD - Price action within the last three months on the key GBP/USD pair (a 4-hour chart of which is shown) has been characterized by a series of chart pattern breakdowns. On the accompanying chart, we can see from left to right that a rising parallel channel was broken to the downside in late September; then a triangle was broken down in late October; another triangle was then broken down in mid-November; and we now find price having just tentatively broken down below a rising wedge pattern. Does this mean that the pair will continue to plummet mercilessly? Not necessarily. However, any continued bearishness with a potentially strong break below the 1.4550 region, which represents the recent 6-year low in the pair that was hit in mid-November, should have substantially bearish implications going forward. This 1.4550 level can be considered exceptionally significant support, so in the event that price reaches and then goes on to break that level, the pair should likely carry considerable further momentum to the downside.

James Chen
Chief Technical Analyst

FX Solutions

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(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.)