The GBPUSD has some of the best technical levels around at the moment. On Sunday I pointed out two handles that would be key should the pair continue to weaken as it did on Friday.
A pullback was my base case here given last week’s price action. Here’s what I wrote on Sunday:
The fact that buyers were unable to force a second retest of resistance at 1.4335 last week may suggest a pullback is in order.
Friday’s selloff is what tipped me off to the idea that we’d see another round of weakness this week. Monday’s close below 1.4070 exposed the next key support at 1.3850, two levels that I included in Sunday’s forecast.
So where to from here?
At the moment, sellers are defending the 1.4070 handle following some relatively hawkish remarks from BOE’s Mark Carney.
As long as the pair remains below 1.4070 on a daily closing basis (New York 5 pm EST), the downside remains exposed. However, if buyers can close the day back above 1.4070, it would suggest that further upside is in store and re-expose 1.4335.
Per the weekly forecast, key support remains 1.3850. It’s going to take a daily close below it to open the door to the next support level at 1.3610. This is the level I pointed out to members on February 4 as an ideal place to watch for bullish price action.
The 1.3610 area was part of the trade idea I gave to members at the start of the week:
Similar to the EURUSD, I think the pound could see some weakness at the start of the week. While you could watch for bullish price action from 1.4070, I think it makes more sense to look lower toward 1.3850 or even 1.3610.
I’ll remain bullish the GBPUSD as long as 1.3610 holds on a daily closing basis. That said, I do think this uptrend needs to unwind a bit more before we see any signs of renewed strength.