November 6, 2013 – GBP/USD (daily chart) has rebounded from a double bottom formation around the 1.5900 support level. This occurs within a month-long consolidation after the pair trended up from July to hit a 9-month high at 1.6259 in early October. After that high was reached, which was just short of major resistance at 1.6300, both a double top pattern and a double bottom pattern have formed within a well-defined trading range approximately between 1.5900 support and 1.6250 resistance.
Having just hammered out the double bottom around 1.5900 earlier this week, the pair has rebounded towards a potential re-test of the 1.6250 double top. Before it may potentially reach that level, the pair should bump up against intermediate resistance around 1.6150. In the event of a breakout above both 1.6150 and the 1.6250 double top resistance, price will have confirmed a continuation of the 4-month uptrend and could then reach for further upside targets around the noted 1.6300 major resistance and then 1.6500. Any breakdown below the 1.5900-area double bottom should find key support further to the downside around 1.5750.
James Chen, CMT
Chief Technical Strategist
City Index Group
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