The GBP/USD pair fell hard during the course of the day on Tuesday, breaking the bottom part of the previous hammers that have been a feature of this market. With that, I feel that this market is ready to continue going lower, probably heading down to the 1.52 level. After all, that is the next support barrier, and of course the markets will be attracted to it.
With this, if we can break down below the bottom of the range for the session on Tuesday, I am a seller. On top of that, I also think that rallies will offer selling opportunities as we are below the uptrend line that we have seen hold this market up during the summer. With that, it is not until we break well above that uptrend line that I would consider going long.
Selling rallies, selling breakdowns
I believe that selling rallies will be one of the best ways to trade this market, as the breakdown through the uptrend line of course signifies that there is a lot of weakness. With this, I believe that the market will continue to find plenty of sellers every time we rally, because obviously something has changed with the British pound. With this, the 1.55 level should continue to be massively bearish as it was not only the horizontal support previously, but it is also where the uptrend line is currently intersecting.
If we break down below the 1.52 level, the market should then head to the 1.50 level after that. That of course will be a massive support level, as the market will recognize it as a large, round, psychologically significant number. Needless to say, it will attract a lot of attention so I feel that the market will only drop to that level as the buyers will certainly recognize it as value. On the other hand, if we break above the 1.55 level, the market should then head to the 1.58 level given enough time.
