Fibonacci and Trendline (2011-07-06 GBPUSD analysis)

Look like BYD didn't have enough power to break out. It is still under the short-term pitchfork. But I am still quite optimistic towards it.

4-Hour chart of GBP/USD:


We can see that sterling has been rising along the green up-trend line for a while, and was resisted by the orange down-trend line.

Gradually a flag shape has formed, and we could expect increased volatility. Interestingly, the bullish trend of the pounds ended at around 61.8% fibonacci level. It looks like this retracement has a certain influence.

Red line is the longer term down-trend resistance. Of course, there will be a strong selling force when GBP reaches the line.

Together with the estimate of fibonacci retracement, it is expected that pounds could reach around 1.625 after around 2 weeks, and will be blocked and turned its direction downwards again.

Whether it can break out depends on any economic data or breaking news at that time. We will have to wait then.