Today I’m going to provide an update on Friday’s GBPUSD commentary where I called for a possible fakeout.
We’ll discuss key levels and targets, plus the latest on the US Dollar Index (DXY).
Watch the video below and scroll down for the annotated charts and analysis.
Last Friday, I wrote about a possible fakeout developing from GBPUSD.
The pair had closed above the 1.2720 key level on Thursday only to close back below on Friday.
Friday’s close confirmed the fakeout from GBPUSD, opening up key levels like 1.2550 and potentially lower.
So how is that idea going so far?
We saw bulls test 1.2720 as new resistance on Tuesday, and so far, it’s holding up on a daily closing basis.
Whether this turns into a more significant pullback depends heavily on the DXY.
Despite a mere 12% weight in calculating the dollar index, the DXY is a key driver for the pound.
The inverse correlation between the two is alive and well, thanks to the pound’s close relationship with the euro.
As mentioned in Tuesday’s video, DXY 102.60 is the level to watch for those trading EURUSD and GBPUSD.
Until we get a higher time frame reclaim of 102.60, any pullback from these two currency pairs is temporary.
I’m still short GBPUSD from last week, as mentioned to VIP members.
However, I’m waiting to see if the DXY can reclaim 102.60 before I commit more capital to the idea.
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