The GBP/USD pair fell slightly during the course of the session on Friday, as we continue to see some grinding in this marketplace. It makes sense though, because the 1.57 level was massively supportive, is now being tested as resistance. It’s probably only a matter of time though before we see a significant breakdown. We are below the 61.8% Fibonacci retracement level of the longer-term trend, and therefore that typically means that you will eventually make a “round-trip” to the beginning of the uptrend. It is because of this that I am waiting for a break down below the recent lows over the last week or so in order to start shorting again.
On the other hand, if we saw significant rallying and resistance, that would be reason enough to sell as well. Ultimately, this market should continue to go lower given enough time anyway, so essentially I am basically being as patient as possible, looking to find value in the US dollar. It isn’t necessarily that I don’t like the British pound overall, it’s just that the US dollars so strong so it’s almost impossible to go against that trend in general.
Continuation to the downside
Looking at the shape of the candle, there’s not too much information to be taken away from it other than we are not ready to make our move yet. I think that we will see continuation to the downside anyway though, because the trend is so strong and again, we have broken down below the vital 61.8% Fibonacci retracement level. If we do break down, I believe that the 1.55 level will open the doors too much lower levels, such as the 1.50 level which of course would be a naturally strong support area based upon the fact that it is such a large round number.
On the other hand, it is possible that we could bounce from here and look for even more resistant. If we do, I would expect the 1.60 level to be massively resistive, and probably an excellent selling opportunity as well. At this moment time, I just don’t have any interest in buying this pair.
