Rate rallies to resistance at the 1.4250 area and falls back to leave a huge wick. Holds lows so far but a reversal could be in the works if the sort-squeeze is over. Light stops seen on the move over the 1.4100 area as late shorts get squeezed.

Two-way action continues suggesting that shorts are aggressively adding and longs are trying to find a bottom. Stops and aggressive selling drive the rate to a 23.0 year low last week. Short-squeeze likely in progress after first attempt to rally was sold back but recovers. Overnight economic news seen as positive; rate trading on technical's now that a pullback from the 1.4250 area is in the works.

Signs of the bottom may be showing up as "smart" buyers reported in GBP Wednesday and Thursday night last week. Spillover from EURO likely but modest. Look for two-way action into this bottom. A short-covering rally is increasingly likely now. Late sellers likely in or hurting. 

GBP USD Daily

• Resistance 3: 1.4380
• Resistance 2: 1.4300
• Resistance 1: 1.4250
• Latest New York: 1.4176
• Support 1: 1.3550
• Support 2: 1.3500/10
• Support 3: ?

Data due Wednesday: All times EASTERN (-5 GMT)

• NONE

Forex Analysis by Jason Alan Jankovsky at ForexPros.com. For more details about Forex Trading and Tips for decent earnings through Forex Trading, Please check http://www.forexpros.com