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Just yesterday we reviewed the significance of the 1.40 handle on the GBPUSD. Viewing things from the daily time frame as we did yesterday, there’s no doubt that the area has served as a pivot since late January.
At the same time, a level on the 4-hour time may be just as critical. Since the March 1 low at 1.3711, the GBPUSD has carved an ascending trend line. That level is what helped trigger today’s bounce.
What does this mean for the pair’s future direction?
The answer to that comes down to your trading style and preferred holding period. If you’re a longer-term trader who likes to hold positions for weeks or even months, a move below 1.40 may not mean a whole lot.
In order to pose a threat to the uptrend that began in late 2016, sellers would need to force a move below 1.3900 and perhaps even 1.3700.
However, if you’re a shorter-term trader who holds positions for a few days or maybe a week, a close below the 1.40 area could offer a chance to get short.
As I mentioned on Sunday, a close below the 1.40 handle would expose the next key support at 1.3900/10 followed by 1.3760.
Alternatively, a move higher from current levels would likely encounter selling pressure near 1.4080/90. A close above that would open the door for a move to the recent swing high at 1.4240.
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