GBP/USD, 9 Juli 2007
Cable has managed a 4th consecutive week of gains, but if we look at the weekly candlestick charts we can see it formed a toppish formation.
The week started very well for the British pound, the pair managing to break and stay above the 2.0133 top; the middle of the week was a battle between bulls and bears as the 2.0200 level proved to be a tough resistance, after 3 failed attempts to form a new high the pair slipped lower on Thursday and the move continued Friday morning while the markets waited for the NFP release, after the news cable started to recover some of the lost ground and managed to close the week just above the 2.0100 round number.
With a new high at 2.0205 we have a new primary target for bulls, but the candle formation we mentioned above is worrying and we will monitor the situation closely. A continuation of Friday's recovery move will set the sights on another push towards the 2.0205 high and if that's successful we are in for another record high in the last 26 years.
If on the other hand cable doesn't manage to hold above 2.0100 and falls again towards the 2.0050 support zone and lower on to the 2.0000 level one will have to pay close attention to price action around those levels as the bear pressure might become to strong and price might slip under.
Resistance Levels
* 2.0200 – Round number
* 2.0133 – April 18th High
Support Levels
* 2.0060/70 – April 25th High
* 1.9840/70 – May 4th / December 1st 2006 High
* 1.9750/60 – retested level, May 11th low
Analysis by Bogdan Parascanu of FX Instructor
