Hello everyone!

If you read my last blog about the GBPUSD , GBPUSD - MT Strategy (16 Jan 2013) , I said downside is supposed to be contained above 1.5730, the 200% extension of the bearish breakout on daily (1.6058/1.6381), last week, the pair almost reached that level , just 10 pips away, If we check the daily , according to %(R) indicator, downside is supposed to be contained above 1.5735 levels, back again to %(R), we can clearly see the bullish divergence, at this point we have good setup for long entry 5 or 10 pips above last Friday's high - 1.5825 - and stop 20/30 pips below its low - 1.5745.However, a daily close back above 1.6058 will suggest that recent fall from 1.6381 has already finished at 1.5745 and the pair should target 1.6381, above 1.6381 will target 161.8% of (1.6058/1.6381) at 1.6580.

On the 4 hour chart, as long as 1.5892 holds ,the pair is under negative pressure with further downside risk to 1.5480 levels, break of the key resistance 1.5892 will bring strong rebound to 1.6040/1.6180 levels.

One more point. we have bullish pattern under development , falling wedge pattern, bullish reversal.added to that %(R) is diverging the price at the lower support line, so break of 1.5892 will confirm bottoming at 1.5745 and it would send the pair further higher to  1.6040/1.6180 levels.

Best Regards

Haitham