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The GBPUSD is down big for the fifth day in a row.
In fact, the pound has been down in eight of the last nine trading days.
And for those of you who caught the May 6th sub 1.3110 close and retest at 1.3120, you’re staring at more than 300 pips worth of gains.
I wrote about this selling opportunity on May 6th.
So where to from here?
Well, yesterday’s candle broke the previous swing low near 1.2880, and today’s session it testing the next key support at 1.2800.
The latter supported GBPUSD in mid-February. It also served as a pivot in late December and early January.
If sellers can get through the 1.2800 area, we could see GBPUSD extend lower toward the 1.2700 handle.
Notice how this level attracted a bid last October. It also served as a pivot throughout December and January.
Below 1.2700 there isn’t much until 1.2480.
However, I’d be careful trying to short GBPUSD at this point.
If we draw a descending channel starting with the March high, you can see how the lower level intersects with the current intraday low.
Whether or not GBPUSD catches a bid here is yet to be seen.
But I wouldn’t want to be shorting the pair into potential support. I also don’t want to buy given the recent weakness.
The pound is getting stretched here considering the 160 pips between today’s price and the 10 and 20 daily EMAs.
All in all, it may be best to stand aside to see what happens in the 1.2800 region.
Shorts who caught the May 6th selling opportunity have had a nice run, but sellers may need some time to regroup before GBPUSD is ready for the next leg lower.
And buyers may have ideas of their own in the meantime.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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