GBPUSD Bulls Take Control But For How Long?

• faithmight
• August 1st, 2010

Sterling starts the new month of trading slightly bid as the $GBPUSD continued Friday’s rally to make new highs to 1.5732 in early Asian trading. As the market opens and the new week unfolds, cable traders are watching to see in which direction will the pair break. Will the $GBPUSD finally exhaust and produce a price correction or will this now 9-day rally continue higher?

Taking a look at the hourly chart, we see a lot of confluence at support (former resistance) levels and Fibonacci levels. If price can break below 1.5690, where price found support in early trading before making the new highs, 1.5640/20 will be the first area to watch for bearish momentum. But 1.5550 remains a key level of support. Above this price level and $GBPUSD still remains bullish with 1.5750 the next target for bulls.

The calendar is packed this week. Later today, we will get UK PMI, US ISM, and Bernanke. Later in the week is UK home prices, construction PMI, services PMI, IP, MP, and a rate decision from the Bank of England. From the US this week is personal income, personal spending, pending home sales, consumer confidence, ISM non-manufacturing, and unemployment data. Much of this data the market will compare and the exchange rate will fluctuate accordingly. If the calendar confirms further what the market already knows, $GBPUSD could continue its rally towards 1.5750 and then 1.5820/30 level as anticipated by bulls. If we get any surprises of strength in the US economy or weakness in the UK, that long awaited price correction may finally materialize. Trade what you see!

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Tickers: GBPUSD

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