Since making a double top last week, the GBP/USD has consolidated its gains and is encroaching on significant short term support prior to the BOE interest rate announcement tomorrow.
A downward sloping resistance line from the 1.6280 on the daily chart has kept in check any further gains as the short term rising trend line off of the January 7th low draws near. While the consolidation pattern resembles a cross between a bullish flag and a downward sloping wedge, we will refrain from identifying the pattern by name.
As the current trend is rising, the bias for this play will be to the upside. A breach above the falling resistance line would first target the double top at 1.6280, followed by the November 2010 high at 1.6870.
Support for the GBP/USD comes in at 1.6000, a level that coincides with the rising trend line from the January low as well as the 20-day moving average. Further support will be found at 1.5820 near the 100-day moving average. Also 1.5750 may come into play.
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Russell Glaser is a Currency Analyst with ForexYard. Russell provides analysis in the FX spot market by employing fundamental research methodologies. In addition to currencies, Russell closely follows the correlation between the Commodities market and the movement of equities. His writings have been published on the ForexYard Trading Blog and associated partner sites. Prior to joining Forexyard, Russell Glaser served as a management consultant in the financial services industry, advising Fortune 100 companies. Russell holds a degree in finance from the Fisher College of Business at The Ohio State University.
