In an earlier post (” GBPUSD keeps the momentum going as buyers remain in control “) the technical case for the bulls was made with the price extending up trendline resistance at 1.6216 and 1.6226. When trends accelerate, the traders who trade against the trend need to prove they can take back control. They could not (low reached 1.622736) and the selling stopped.

Where to now? The price is now looking to enter the consolidation area from July to August in 2011. The low close price from August 12 to August 30th came in at 1.62785 (on August 25th 2011). This is the next upside target. Also near this level is another trendline resistance line at the 1.6273 level (see chart below). Above that looks toward the 1.6337. Of course, the 1.6300 area is likely to attract the typical selling interest.

On the downside (see chart below), traders will likely lighten up on a move below the 1.6252-58 now. This is the 38.2%-50% of the last leg higher and also brackets the last high at 1.6256. The sellers have not taken firm control yet. Maybe there is a reason to sell here (see above) but that is simply step one. They need to do more to prove the trend is over.