GBP/USD: Having broken and held above the 1.5660 level and put in a temporary bottom at 1.5344, GBP is building on that strength.

We have also been watching GBP on the crosses and have seen GBP/JPY and GBP/CHF strengthening as well. This is further evidence that the GBP/USD pair has more upside to go with its present breakout.

Our minimum upside target stands at the 1.5906 level, its high of Dec. 14, 2010, at which the pair may face the bears on an initial test. Conversely, if a decisive penetration of that level occurs, we should see the pair targeting its Nov. 19, 2010 high at 1.6091 followed by the 1.6296 level, its Nov. 4, 2010 high.

Its daily stochastics are bullish and pointing higher supporting this view. To annul our upside view, the pair will have to break and hold below the 1.5344 level. This will resume its short-term weakness and turn focus to its September 2010 low at 1.5296 and subsequently its psycho level at 1.5000. All in all, having bottomed out at the 1.5344 level and triggered a strong recovery, further upside risk is expected.
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 also produces The Professional Suite for his subscribers. 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.