By: DailyForex.com
The GBP/USD pair initially tried to rally during the Monday session, but as you can see found too much resistance at the 1.54 area in order to continue. In fact, we fell enough to form something that looks kind of like a shooting star, at least in its meaning. We are now sitting on top of support at the 1.53 area, which I believe is simply the outside border of the true epicenter of support at 1.5250, based upon the recent stair step action.
Because of the recent action, this does look like a relatively negative market. However, I would like to see a close below the 1.52 level in order to feel confident about shorting. I do believe that the US dollar will continue to be one of the stronger currencies out there, and that the recent bounce that we have seen in the British pound has been a bit overdone. After all, one of the main reasons that the currency did bounce was the simple fact that the United Kingdom had not reported a "triple dip recession." However, it barely produced any growth this time around, and as such that relief rally was probably a bit overdone.
1.50
I believe that if we can break down below the 1.52 level, the 1.50 level will be targeted in relatively short order. It's down there that things get really interesting, as if we break down significantly we really could pick up some momentum. Don't get me wrong, I still see support at the 1.49 handle as well, but I don't know that it's going to be as strong as a big round number like the 1.50 handle. After all, that's the kind of number that attracts even the idiots out there, and as a result you almost see significant fights at these numbers.
One thing that I cannot overlook is the fact that we have broken down below what looks like could be a channel. If that has happened, certainly it means something, and certainly plenty of people have noticed this. This is one of the reasons I have a bit more of a negative attitude towards his pair, even though I still think that the 1.5250 level has to be overtaken completely and we have to confirm it below the 1.52 handle.
