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The Pound is finding resistance above 190

Currencies / British Pound Sep 23, 2006 - 11:38 PM GMT

By: Nadeem_Walayat

Currencies

The British Pound has rallied strongly from the lows earlier in the year to 190, but now has hit heavy resistance at above 190, which suggests a correction is likely.

The Pound is finding resistance above 190



Technical Analysis
1. Price Pattern - The Pounds twice failed to break to new highs and the last swing lower made a lower low at 186, with a lower high preceding it, this significantly weakened the uptrend. Now again the £ at 190 is not able to break above the preceding highs, and finding heavy resistance which implies a test of 186 is likely.
2. Support - Immediate support is at the 186 last low, with major support between 182 to 185.
3. MACD - (Bottom indicator) The MACD indicator shows negative divergence, as the GBP has made a higher uptrend the MACD is clearly making lower highs, implying a test of the downside is likely.
4. Trendlines- Trendline support is currently at 188 coming up from the lows, this would be a good confirming trigger for the downtrend.

SELL Trigger - The £ is a sell at current prices with confirmation on break of the up trendline at 188.
Stop Loss - Would be over the high of 191, and then the high of 191.50.
Target - The Pound is initially targeting a move towards 186, which if breached would push the £ into the support zone of 182 to 185.

Nadeem Walayat

(c) MarketOracle.co.uk 2005-2006

Disclaimer - This Forecast / Trade Scenerio is provided for general information purposes only and not a solicitation or recommendation to enter into any market position, and you are reminded to seek independent professional advice before entering into any investments or trading positions.
The Market Oracle is a FREE Financial Markets Forecasting & Analysis online publication. We aim to cut through the noise cluttering traditional sources of market analysis and get to the key points of where the markets are at and where they are expected to move to next
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