FX.co ★ GBP/USD Intraday Technical Analysis & Possible Scenarios August 4, 2011

It's important to notice today's Economic Calendar as we have an important announcement about GBP interest rate which may affect the market in a strong way.

Technically, the Support level 1.6220-1.6260 could hold and limited further decline of the pair.

Also the pair has bounced of this level targetting 1.6545-1.6500.

Now the pair is testing the highs of the consolidation range 1.6440 - 1.6470 which constitutes a good resistance area.

On the 4H chart, the pair is testing the upper limit of the newly formed bearish channel.

Also the pair may be forming a HEAD AND SHOULDERS reversal pattern.

Possible Scenarios:

1.Formation of a double top pattern on the DAILY chart targetting the neck-line 1.6250 with its break it will target 1.6000 directly.

This scenario can occur and be confirmed if resistance level 1.6500 holds the price below.

2.Resuming the upside movement as long on condition that 1.6540 isn't broken to the downside.

This will target 1.6750,1.6875 then 1.6900.