GBP/USD: Range Trading Off 8-Month High

GBP/USD continues to trade in a relatively tight range just above the 1.6000 psychological level after coming off the eight-month high of 1.6161 that was established just one week ago. This range represents a pullback/consolidation within the context of the steep bullish trend that has been in place since the double-bottom reversal from the 1.4800 price region in July. Since the noted eight-month high was reached mid-week last week, the pair has fluctuated within a flag/pennant-like pattern consolidation between 1.6150 resistance and 1.6000-area support, and appears to be building up for a potential breakout.

If it is a true flag/pennant pattern, the bias is toward a trend continuation to the upside on a pattern breakout, which would have a primary price objective around the major 1.6300 resistance region. In contrast, an extension of the current pullback would be indicated on a substantial breakdown below 1.6000, which could drop price back down toward key support around the current uptrend support line and the 1.5750-1.5825 support zone.
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