GBP/USD fell during the session on Wednesday as the Pound got absolutely hammered against most other currencies. The pair has been grinding lower, and we even suggested that perhaps it was getting ready to make a significant move. While the move on Wednesday was impressive, there is still one major hurdle for the bears to get back in order
The 1.53 level sitting just below the market price at the moment is a major support line. In fact, it is the bottom of a massive support zone from the 1.53 line to 1.55 or so. This area has been very supportive over the last several weeks, and is also a “neckline” to a massive head and shoulders pattern on the weekly chart that could send this pair as low as 1.40 or so based upon the measurement of the pattern.
With the action on Wednesday, it is going to take a very brave, or foolish, trader to buy this pair. Yes, the support line did hold, but the truth is that a lot of the support just got smashed through in a very short time. The reality is that if the markets start buying the Dollar in general – this pair could fall quickly now that so many of the bulls have been moved out of the market.
The closing of a daily candle below the 1.53 level has us selling this pair hand over fist. The pair could also bounce form this level, but selling that rally is a bit of a no-brainer as the pressure hasn’t really let up over time. The Dollar is without a doubt the most favored currency at the moment, and as long as that is the case – this pair will continue to suffer.
The pair is also very risk sensitive, and will suffer if we get bad economic news we could see a real selloff in this pair, and the headlines will continue to be a concern for anyone long of this pair. Because of this, we will sell rallies on weakness and sell aggressively if we get that sub-1.53 daily close.
Written by FX Empire