FX.co ★ GBP/USD Intraday Technical Analysis and Trading Recommendations for March 9, 2012

On the 4H chart we can see the "Head & Shoulders" reversal pattern which was confirmed on Tuesday when the neck-line 1.5790 had been broken.

As it was expected, the pattern provided some risk for SELL-deals at 1.5870 level corresponding to the right shoulder which was tested twice this week.

Also on Tuesday we could observe breakdown of the lower limit of the mid-term bullish channel with obvious bearish price action. This fact may provide the possibility for opening the short position around 1.5790 with potential target seen at level 1.5480.

The GBP/USD pair also has 50% and 61.8% Fibonacci levels located above at 1.5835 & 1.5865, these levels are strongly defended by the bears.

The expected targets for the confirmed pattern are located at 1.5720,1.5662 and 1.5630 levels. However, the pair has an important support at 1.5750 which may give some retracement before its breakdown.

Some profits should be taken at the expected targets. Stop loss should be placed lower near 1.5880, as breakdown of this resistance level invalidates the current bearish scenario and opens the way to the point 1.5970.