GBPUSD to Run into Significant Resistance
The Sterling has made a significant reversal off of trendline support, keeping the November to March uptrend intact. Significant rallies are set to run into substantial resistance near previous peaks at 2.0131, with a failure to set up a possible head and shoulders trend reversal formation. This area coincides with a falling trendline from the July and August peaks, as well as a significant Fibonacci level from the month-long bear wave. The 2.0110-2.0150 will make a significant test of cable strength, with a failure eyeing a retest of trendline support near 1.9800 and 1.9768.
A look at the 60 minute chart highlights the significance of the falling trendline, with three tests in July and August leaving the move intact. The levels likewise coincide with the 50.0% Fibonacci of the 2.0652-1.9648 wave near 2.0150. A break above 2.0150 would negate the bearish scenario, with continued extension to eye the critical 61.8% Fibonacci of the same move at 2.0267.
-David Rodriguez, Currency Analyst