GBP/USD Intraday Technical Analysis and Linear Regression Channels for May 22, 2012

Show full picture

The GBP/USD currency pair witnessed quick decline from 1.6120 towards 1.5730 during last week.

The GBP/USD has Intraday support zone located around 1.5740 - 1.5760 which prevented further decline showing significant bullish price action.
Now the upper limit of the Violet channel was broken to the upside Yesterday while Resistance zone 1.5840-1.5860 is still being tested by the GBP/USD pair which if broken will probably allow the pair to reach the upper limit of the Blue channel and the next Intraday resistance zone at 1.5940-1.5960.
After a bullish price action towards 1.5740, this price level is considered a valid BUY entry with tight SL below 1.5700.


Show full picture
Breakdown of Price Zone 1.5960-1.5940 lead to quick decline towards 1.5860-1.5840 which was broken too, leading to price zone 1.5740-1.5760.
Price Zone 1.5740 - 1.5760 corresponds to the lower limit of the Yellow & Blue channels and also to the Average Daily Range which was indicative of possible bullish retracement coming after.
The GBP/USD has shown extensive bearish decline last Thursday exceeding the Average Daily range breaking its Intraday Support levels indicating possible bullish retracement too.
There's a possible Head and shoulders being formed with head at 1.5730 which becomes confirmed with bullish closure above neck-line located at 1.5840 to be targeting to the price level of 1.5940.
Breakthrough 1.5840 corresponding to the upper limit of the Yellow & Blue channels will probably allow the GBP/USD to reach higher levels at 1.5885 and 1.5925.

Based on the previous analysis
The market offers a bullish opportunity at price zone 1.5777 with a tight Stop Loss below 1.5720.
TP levels are to be located at 1.5810, 1.5885 and 1.5925