By Mohammed Isah of fxtechstrategy.com
: The pair recovered from its short-term low at 1.5708 this week and broke through its Sept. 30, 2009 high at 1.6124 and its daily major emas to close at 1.6356 on Friday. This is the pair's strongest weekly close since June 2009. With its declines from the 1.7041 level (year-to-date high) halted, GBP now looks to head further higher, targeting a confluence of resistance levels (its Sept. 23, 2009 high/SH falling trendline) at 1.6468/66.
That zone is significant and may turn back the pair. However, if the pair can breach that resistance, there is potential for further upside gains toward 1.6740, the pair's Sept. 11 2009 high. An eventual loss there would set the stage for a retarget of the year-to-date high at 1.7041. A break and hold above that level will be required for the pair to resume its medium-term uptrend. The pair's weekly RSI remains supportive of this view because it is bullish and pointing higher.
On the other hand, on any pullback from its current price level, the pair should find support at 1.6124. Further down, the 1.6000 psychological level will be the next support ahead of its Oct. 13, 2009 low at 1.5708 and then the 1.5500 psychological level. On the whole, with the pair having rallied strongly the past week, risk remains to the upside, but GBP must break and hold above the key resistance zone at 1.6468/66 to clear the way for further recovery.
to see a larger version of the preceding chart.
Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.