GBPUSD has broken below the 1.2850 handle. I discussed this level on Monday as one to watch for directional cues.
As long as the pound was above it, there was a chance for a bounce.
However, a daily close below it was going to open up downside targets including 1.2700.
Following a brief bounce of just over 100 pips on Wednesday, sellers regained control before the session close at 5 pm EST.
It was Wednesday’s close that broke the 1.2850 level but only by a few pips. The last 48 hours has confirmed the break with a loss of an additional 50 pips.
That brings us to the game plan for next week.
A retest of the 1.2850 (new) resistance area could produce a favorable selling opportunity.
As I mentioned above, key support comes in at the 1.2700 handle. It’s going to take a daily close below that to expose the 1.2500 region.
But don’t forget how indecisive pairs like GBPUSD have been so far this year.
Just about every currency pair on my list is caught in a range; and not the kind of range that’s conducive to trading.
The GBPUSD, for example, has already produced one false break this year as has its EURUSD counterpart.
So unless you see an opportunity that’s too good to pass up, you should stay on the sideline. At least that’s how I’m approaching these markets.