GBPUSD—approaching uptrend line

Cable is approaching its uptrend line at 1.5712 and a break of this would be significant. First, there's certainly a good case to be made for an ABC correction being in place. If so, last week's 1.6107 high marked the end of it. I'm still thinking that was too short (.618 of the A wave would have been 1.6391 and the bull flag had a target of 1.6461) but the market will tell. Certainly a break of the uptrend line along with a break of the RSI uptrend line on the daily chart would signal there may be more lows in the works. At that point I'd look for a short.

1.5670 is the 9/30 low and 1.5627 is a former daily speed line that the pair broke above. Then there's the psychological 1.55, below which is probably a return to 1.5297. If the pair rallies, expect resistance at 1.5997 and 1.6107.

Here's the daily chart:













© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

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