GBPUSD: Corrective Recovery Remains On Course

GBPUSD: With our corrective recovery views panning out and pushing the pair from its intra day low at 1.4871(Mar 10’10) to close marginally higher last week, risk of further upside gains is likely. On the back of its current strength, we had earlier noted hammer candle formations (bottom reversal signal) on both the daily and weekly charts suggesting a loss of downside momentum. The past week has also produced another one on the weekly chart creating two hammers back to back. To us, GBP may be building a stronger platform for extended corrective recovery. With that said, a follow through higher on its past week strength is expected towards the 1.5343 level, its Feb 19’10 low after eroding the 1.5195 level, its Mar 08’10 high. The bears may come in at this stage and push the pair back down but if that fails to occur, our bigger target standing at the 1.5574 level , its Feb 23’10 high will be aimed at. On the downside, its invalidated resistance at the 1.5195 level should reverse roles and provide support if a pullback is triggered with a break through there allowing for more downside pressure towards the 1.4871 level, its Mar 10’10 low and then its 2010 low at 1.4782 level.

Mohammed Isah
Market Analyst
www.fxtechstrategy.com

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