FX.co ★ GBP/USD Intraday Technical Analysis & Trade Recommendation December 22 , 2011

Looking at the GBP/USD 1H chart, we notice that the pair had a sharp rise during the last two days.

Meeting a resistance area between 1.5700-1.5750 which is a strong daily resistance, the pair formed a Head & Shoulders reversal pattern.

Now the pair is testing the lower limit of both violet & yellow channel and about to break them to the downside.

VIOLET CHANNEL represents Yesterday's movement.
BLUE CHANNEL represents the last 2 days' movement.
YELLOW CHANNEL represents the last 3 days' movement.

Based on the previous analysis:

The market offers a short opportunity when the pair closes below 1.5645 breaking both neck-line of the reversal pattern & the lower limit of both marked channels.

SL should be placed above 1.5705 & TP should be at 1.6005 then 1.5555 with possible further targets.