The GBP/USD pair initially tried to rally during the course of the session on Tuesday, but found the 1.52 level to be far too resistive to continue going higher. With that being the case, we did end up forming a massive shooting star like candle, which of course is at the bottom of a longer-term downtrend. After all, we have recently broke down below the uptrend line that had held this market higher during the course of the summer, and with that the market started to show signs of the market being in a downtrend. In other words, it’s very possible that the uptrend ended late in the month of August.
As we broke down below the uptrend line, we fell all the way down to the present levels, and then bounced back to test the bottom of that uptrend line again. With that, the market then turned back around as we fell below the 1.55 handle. Ultimately, breaking down below there reached towards the 1.52 level, and as a result it looks like we are ready to try to go lower in general.
Selling a breakdown and rallies
If we can break down below the bottom of the range for the session on Tuesday, the market should then reach down to the 1.50 level, and with that attract a lot of attention as it is a large, round, psychologically significant number. That is a number that will attract a lot of traders in general, and as a result the market will find quite a bit of buying pressure near that area, at least for the short-term. Ultimately, we could break down below there, and if we do the market should then reach down to the 1.48 level. On the other hand, if we bounce from the 1.50 level, we could very easily find ourselves testing the 1.52 level above as well, as it will have to test that area for resistance again, just as we have the 1.55 level.
