GBP/USD
Strategy: Flat
The bullish GBPUSD correction that has played out over the past three weeks may be starting to lose momentum. Prices put in an Evening Star bearish reversal candlestick formation at the top of a rising channel that has been guiding the pair higher and dropped back to the 1.62 level, meeting support at the channel’s mid-line. As we illustrated last week, this area also corresponds to the middle axis of a well-defined range that has confined prices since May 2009. A close below this juncture would go a long way toward showing the bears are back in control, opening the door for a move to 1.6006 at the channel’s bottom. However, absent this confirmation, there remains a risk that prices will continue to push higher to the long-term range’s top near 1.6750. We remain on the sidelines and continue to monitor developments for now.
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