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GBP/USD - What if the mini-Consolidation Evolves into a Larger One?

The GBP/USD has been consolidating so far in July after a rally in June from 1.6692 to about 1.7180, a high not seen since 2008. The consolidation has been between the 1.7180 high and 1.7085, last week's low. We start the week, respecting this consolidation support.

GBP/USD Daily Chart 7/14


But let's say GBP/USD breaks the support, and fails to challenge the 1.7180 high, then we should consider the possibility the pair has entered a consolidation period. If we look back to the consolidation periods in 2014, and the one in late 2013, we can see that
1) they lasted about 1.5 months.
2) they were all 300-350 pips.
3) The RSI came down to 40 but held. 

Given these patterns of consolidation, if the current mini-consolidation does develop into a more significant one, we should still limit the bearish outlook toward (1.7180-300 = 1.6880). I would be a bit conservative and look at the 1.69-1.6920 support pivot area first. But of course, a clear-out of key support levels can always pave way for continuation of the prevailing trend, so a dip below 1.69 can still be within our bullish expectations. We should also monitor for a price bottom when the RSI comes back to 40.

I think the trend is still going and has room to run, but if the BoE takes the 2014-rate hike off the table, we might see GBP/USD slow down and establish/confirm a high on the year.

From the US side, unless Yellen convinces traders the bank will NOT push rates back to the second half 2015, the USD can strengthen and slow the GBP/USD's advance.