Pounds to Dollars Weekly Chart 11 oct 2010
The pounds to dollars pair is at an interesting juncture as we test the underside of the psychological USD 1.6000 price handle once again which triggered the pullback of early August, with the pair failing to breach this level and falling from USD1.5994 to a low of USD1.5296 by the end of the month. The weekly chart is perhaps more informative for our analysis at present, as this clearly indicates the deep price resistance now immediately ahead, which runs from the current price level, all the way through to the 1.67 price region which defines the top level of this channel. Last week’s narrow spread up candle, continued the bullish momentum for cable of the last few weeks, and with both the 9 and 14 week moving averages providing excellent support to the move, we should see a break and hold above 1.6000 in due course.
The question of course is how far we can expect to see the pair run from here, and the extent of the rally is likely to be determined further weakness in the US dollar, which will almost certainly provide the catalyst and impetus for a probe higher and into the deep resistance above. Whether this will be sufficient for the pair to break above the 1.67 level is questionable, but should the quantitative easing by the FED be prolonged, as seems likely following Friday’s disastrous NFP data, then we may expect to see a breach here in due course, which would then provide a further platform of support to a sustained move higher. In the short term however, we can expect the GBP/USD pair to move higher and provided the technical picture remains supportive, then we may see a breach of this deep resistance in due course.
