FX.co ★ GBP/USD Weekly Review August 22, 2011

-Long-Term-

The GBP/USD currency pair bounced of 1.6740 last May forming a temporary top which may form the upper limit of a symmetrical triangle.

The pair is expected to have a bearish wave targeting the lower limit of this triangle during next months.

After bouncing of resistance area 1.6740-1.7040 forming a lower high the pair broke the uptrend line that lasted for almost one year.

Till now the price is below the broken uptrend line.

The pair is having a bullish pressure to test the previous top 1.6750 with a possiblity of formation of "Double TOP" on the weekly timeframe.

In general the way for testing 1.6750 is open.

-Short Term-

The pair has formed a new ascending low at 1.6110 which was retest of the broken bearish channel, 50% Fibonacci & area of previous highs and lows.

The daily candlesticks of the end of the previous week were Hanging Man , Shooting star with -ve divergence on MACD & CCI which indicate weakness of the current bullish move & the possibility of beginning of retracement targeting 1.6300 ( the lower limit of the bullish channel & 61.8% Fibonacci ).

Price action towards 1.6300 should be watched in order to determine the features of the coming period;

Break of this level & the bullish channel indicates activation of the Double Top scenario targeting 1.6000 then 1.5778 ( neck line ). However, its coherence brings bullish move again towards 1.6500 - 1.6600.