[dc]C[/dc]urrencies have been difficult technical trading for the past several quarters. This is partly due to the nature of currencies—though there is a lot of TA lore about currencies trending fantastically well, they also go through really choppy periods. Though currency prices are set by supply/demand just like any other asset (the supply/demand of the relative currencies, in this case), supply and demand are both driven by a host of other issues: trade, interest rates, speculative concerns, etc. In many ways, these are the most difficult technical markets on intermediate timeframes, but, patterns still hold.
One of the classic pre-breakout patterns is a series of higher lows into a defined resistance area. We can see this clearly on the chart of the GBP/USD above, suggesting that any breakout above February’s high should have good potential. How to trade? Many answers here. In my published research, we have been long the GBP a while, so it is possible to position pre-breakout. Some trades may wish to enter on the breakout, but there is a tradeoff between aggressive entries, which will often turn out to be entries in fakeouts, and giving up trade location for confirmation. Other traders may wish to avoid the breakout entirely, and position in the first pause or pullback following. All of these choices can make sense, as long as you understand your trading personality and investment mandate—have a set of rules, and follow them.
Keep an eye on the GBP to see how this pattern resolves over the next few weeks.