The GBP/USD pair initially tried to rally during the course of the day on Wednesday, but found the 1.52 level above to be far too resistive to continue going higher. Because of the fact that we found so much selling pressure there, I believe that we will continue to go lower. This was further confirmed later in the day as we broke below the lows of the Tuesday session, indeed a very soft sign. In fact, the 1.51 level is now the support level that we are dealing with, and I feel that it’s only a matter of time before we fall much farther, without a doubt heading to the 1.50 level next.
I think that rallies at this point in time have to be looked at with extreme suspicion, especially considering that tomorrow is Nonfarm Payroll Friday. With this, it’s very likely that the US dollar will be volatile due to that announcement, so having said that it’s very difficult to imagine that a lot of money will flow into this pair today. However, the trend is most certainly to the downside so you have to assume that’s where most of it will go.
Selling rallies going forward
I think that ultimately the rallies will get sold off going forward, as the most recent move lower was so strong. The market had recently broke down below the bottom of an uptrend line that had kept this market afloat during the course of the summer, and now we have not only retested that area for resistance, but fell from there. With that being the case, I feel that the market will continue to go lower and that sellers will return every time we rally. Quite frankly, I would love to see some type of rally on Friday as well, as it should be short-lived as most rallies due to the jobs number in various currency pairs tend to be. That will just simply have me thinking “value” in the US dollar, and have me selling. I have no interest in buying.
