The British Pound (GBP) has spent the last 6 months building a firm support base between 170 and 178, and is now showing signs that it is ready to resume the main uptrend that began June 2001.

Is it time for the British Pound to resume its Bull Market ?

Technical Analysis
1. Support - The Pound has built strong support between 170 and 175.50 and reaching to the recent high of 178, before a test of this strong support can occur, there needs to be a failure to the upside i.e. a false break towards 190.
2. MACD - (Bottom indicator) The MACD has been gradually working out its overbought state in early 2004 which brought a halt to the bull market, the recent correction to 170, saw the MACD go negative and took the pound to an oversold state, and thus priming the Pound for a strong rally.
4. Trendlines- The main support trendlines is some distance away at 166. The secondary support line was broken and gave a warning of possible trend reversal however instead of declining the Pound has made a solid support area. The Pound has already broken resistance line and now targets the next at about 184.

Buy Trigger - The initial buy trigger was the break above 176. The Pound is flirting with the next buy trigger at 178.50 , which given the strength of the base, is likely to break in the coming days.
Stop Loss - Initial support is at 175, and then 173.50 along the uptrend line. Main support is the previous high that held the current correction at 169.50, with the Main Bull Market trendline bringing up the rear at a distant 164.
Target - The Pound is initially targeting a move towards resistance area above 190, between 190 and the previous minor high of 192. The Bull market high of 195.50 will likely be harder to attain on the current move higher.

Nadeem Walayat

(c) MarketOracle.co.uk 2005-2006

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