The double bottom played out exactly as expected, taking the GBP/USD to 1.6742 — completing 3 large quarters (1.6111 to 1.6250, 1.6250 to 1.6500, 1.6500 to 1.6750) in 2 bullish waves.
After the second bullish wave, price consolidated and found support just below 50% Fibo level as illustrated in the chart above. After this consolidation, I expect a 3rd bullish wave as fundamentals have shifted. The USD is weakening across the board as different countries continue to show signs of a global recovery and central banks are starting to make hints that interest rate hikes could become a possibility earlier than expected. Though we don’t expect an interest rate hike from any central bank this year, 2010 could see an interest rate hike from the likes of China, Australia, or the US.
Now, that price has consolidated back to 1.6500 large quarter point last session with a low of 1.6519, news this week will determine if the uptrend continues or reverses.
