The GBP/USD pair went back and forth during the day on Tuesday, ultimately forming a shooting star. That of course is a negative sign, so we can break down below the bottom of the shooting star that formed for the day, this market should drive back towards the 1.50 level given enough time. That area was massively supportive previously, and it is going to take a significant amount of momentum to break below there based upon the fact that it is such a large, round, psychologically significant number. Nonetheless, I do believe that we break below there given enough time, and sooner or later we drive down to the next major support area, the 1.45 handle.
I recognize that is a fairly significant move I am calling for, but without a doubt we have certainly seen a massive change in momentum overall. With the stronger than anticipated jobs number, it appears that the US dollar will strengthen due to interest-rate expectations coming from the Federal Reserve.
The 1.52 level
The 1.52 level above should now be considered the “ceiling” in this market, as it was previously a significant support barrier. At this point in time, the market should continue to offer selling opportunities every time we rally, even if we don’t break down at the moment. This market is most certainly in a downtrend, and the couple of massive red candles from last week suggests that we are certainly seeing quite a bit of bearish pressure enter the market now.
In fact, at this point in time I don’t really have a scenario in which I am willing to buy the British pound, as it looks so vulnerable at the moment. Ultimately, I believe that once we get below the 1.50 level, things get very ugly and we can start to add to short positions. I think that this pair is going to be volatile, yet very profitable to the downside.
