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Chart of the Day - 11/25/2008 - GBP/USD
11/25/2008 – GBP/USD – The current consolidation on the GBP/USD daily chart, as shown, has taken the form of a tentative inverted flag formation. Price is currently near the top border of the flag in a correction off recent multi-year lows. If a close significantly above the top border of the flag occurs (around the 1.5400 region), the flag’s customary role as a continuation pattern will have been invalidated. A subsequent bounce down off the top border of the flag, on the other hand, could presage an ultimate break to the downside of the flag, which would continue the long-term downtrend and target the 1.4550 region, which is the level of the multi-year low. The current bar has stalled around a key 38.2% Fibonacci retracement level (the high-to-low retracement span being measured from the swing high on 10/30/2008 to the multi-year low on 11/13/2008). Therefore, any strong break and close above the 1.5400 region would be a significant feat that could represent a major upside correction and possible trend reversal. James Chen Chief Technical Strategist FX Solutions IMPORTANT NOTICE: These comments are for information purposes only. The information contained on this document does not constitute a solicitation to buy or sell by FX Solutions, LLC., and/or its affiliates, and is not to be available to individuals in a jurisdiction where such availability would be contrary to local regulation or law. Opinions, market data, and recommendations are subject to change at any time. Forex trading involves substantial risk of loss and is not suitable for all investors. (Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend lines in red; chart patterns in yellow; 50-period simple moving average in light blue.)