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The GBPUSD has erased all of last week’s gains in a matter of hours.
Between Thursday and Friday of last week, the pound rallied nearly 200 pips against the US dollar.
But today’s session is a very different story.
The GBPUSD is off Friday’s close by more than 200 pips and isn’t showing signs of stopping.
If you watched Saturday’s forecast video, you know how adamant I was about the significance of Monday’s open for both GBPUSD and EURUSD.
I mentioned several times how Monday’s open would be telling for both pairs.
More specifically, I stated that a gap down for GBPUSD could signal weakness, especially if sellers start to defend 1.3170 as resistance.
Here is the GBPUSD segment of that video:
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Notice how GBPUSD started the week with a 30 pip gap down.
Furthermore, the pound wasn’t able to close that gap within the first few hours of trade.
All of the above is what I eluded to in Saturday’s video.
Given the way GBPUSD has collapsed so far today, a breakdown seems imminent.
Remember, though, that sellers still need to contend with the confluence of support between 1.2960 and 1.3015.
It’s going to take a daily close below that area to expose lower levels.
I use New York close Forex charts, so the “daily close” refers to 5 pm EST. This gives me five 24-hour sessions each week.
Go here to get access to the same chart I use. These are essential for trading price action.
One such level is 1.2770. That will be my first target following a close below the 1.2960 region.
Below 1.2770, we have 1.2570.
As a side note, today’s weakness from the pound has lit the fire under EURGBP, which I wrote about on Friday.
I maintain the idea that EURGBP has bottomed, and the latest selloff from the pound only helps to confirm my suspicion.
As for the GBPUSD, a daily close below the 1.2960 area would confirm the reversal and open the door to 1.2770 and perhaps 1.2570.