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The Pound Bulls Are Standing On Shaky Ground – May 20, 2010

Cable GBPUSD may 20 bearish pennant
Looking at the Cable’s daily chart, it looks like the pound is poised to move lower yet again. Notice how the GBPUSD is forming a bearish pennant pattern. During the past couple of days, the pair has been consolidating into a descending triangle. It could continue doing so for a little while since the stochastics are already in the oversold area. But if the pennant’s or the triangle’s support at around 1.4250 gets taken out, investors could further buy the US dollar in exchange of the Sterling, pushing the pair even lower. The minimum downside target here would be 1.4000. However, if for some reason the pair breaks above the pattern’s resistance (descending line of the triangle or pennant), it could aim for 1.4600. Nonetheless, the bias remains bearish given the pair’s overall downtrend. More...

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