GBP is sitting on its double bottom pattern breakout point now confirmed on the daily chart. The pattern is an outcome of its medium term weakness initiated from the 1.7041 level. That decline halted at the 1.4782 level on Mar 01’10 with a failed rally to a high of 1.5380 pushing the pair back down to the 1.4796 level on Mar 25’10, a few pips from the 1.4782 level. That failed retest created a platform under which the pair sprung to the upside and cut through its earlier swing high at 1.5380 the past week. This development has left the pair with an upside pattern target at the 1.5905 level which is measured by taking the height of the pattern and projecting it from its breakout point. Normally, that is the minimum target which means the pair could shoot through that level and print even further higher prices. Note that another thing counting for the pair is that its Monday gap has been filled and also the breakout point has been retested. This means GBP must have built enough energy that will propel it higher possibly beyond its pattern target and towards its Feb 03’10 high at 1.6068. However, the pair’s preoccupation right now is its Feb 23’10 high at 1.5574. That level is the trigger for further upside gains. What then will invalidate the pair’s current bullish structure? The two key levels that will put this view on hold are a break and hold below the 1.5380 level and secondly, a breach of the 1.5127 level, its April 06’10 high. The latter level if seen will create scope for a recapture of the 1.4796/82 levels where a halt should occur and turn the pair higher again putting GBP back in its broader consolidation range. All in all, the pair is biased to the upside as long as it holds above the 1.5380/17 and 1.5127 levels.
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