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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

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