Ascending Triangle on the GBP/USD 4 hour chart.

The Pound has been strengthening today versus the Dollar and it has formed a very good resistance around the 1.6840 zone where we can also find the 55 period Exponential Moving Average on the 4 hour chart. On the same chart we can also see a good support at the 1.6800 level, where we can find the 200 period Exponential Moving Average. The 1.6800 zone was a good resistance area in the past and now that it has been broken to the upside it should act as a good support level.

We should keep in mind that the lows of the last few candles have been higher than the previous ones, forming what we call, an Ascending Triangle. An Ascending Triangle has a higher probability of breaking to the upside, due to the fact that the price keeps hammering on the same resistance zone until it breaks it. However, the breakout can occur in any direction; therefore, the best thing to do is to wait for confirmation of the breakout before attempting an entry.

If there is a breakout to the upside, then the price may reach the 1.6900 where it may find another good resistance.