GBP/USD Daily Chart — July 29, 2009

Price action on GBP/USD, a daily chart of which is shown, has taken the rough formation of a cup-and-handle pattern. This is a long-term pattern that consists of a large “U”-shaped rounded bottom with a “handle” consolidation on the right-hand side of the pattern that is angled slightly to the downside. In this type of pattern, the event to watch for would be any strong breakout to the upside of the handle. Currently, price is consolidating just below the upper border of the handle. Any strong upside breakout above this border, that goes on to break the pattern high resistance of 1.6740, should be a substantially bullish sign for the pair. In the event of a further extension of the handle consolidation, dynamic downside support currently resides around the level of the uptrend support line extending from the early March low.
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