Chart of the Day - 3/08/2010 – GBP/USD

3/08/2010 – GBP/USD – Price action on GBP/USD, a daily chart of which is shown, has made a bullish correction since the beginning of March after having dipped well below the key 1.5000 psychological level on March 1st. This bullish correction exists within the context of a steep accelerated downtrend in the pair. After having corrected up to approach the 1.5200 price region, the directional bias continues to be bearish in line with the strong current downtrend. The key price level to watch to the downside continues to be the important 1.5000 area, which was respected late last week. With any strong breakdown of the current bullish correction that goes on to re-break down below the noted 1.5000 price region could potentially carry the bearish momentum to target further major support in the 1.4500 support/resistance price region. To the upside, in the event that the current bullish correction continues, the 1.5350 price region should continue to serve as strong resistance within the context of the current accelerated downtrend.
 

James Chen, CMT
Chief Technical Strategist
FX Solutions
 

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(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)