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GBPUSD Ready for the Next Leg Down?

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One day after FOMC, most pairs spent today recovering slightly. Two such pairs were GBPUSD and EURUSD. Both were hit hard yesterday after the dollar finished the day higher.

GBPUSD is one pair that I rarely trade unless I see a really nice pattern and/or event area take shape. The area between 1.607 and 1.610 is one such area. It has acted as support and resistance since early October and could very well come into play again should the pair rally once more.

The prevailing daily trend remains extremely bearish as the market just found sellers once more at trend line resistance from July 15th.

GBPUSD daily chart

GBPUSD daily forex chart at channel resistance

Before yesterday’s event risk, it appeared as though the pair was attempting a bullish reversal in the form of an inverse head and shoulders pattern. However the pair failed to complete the pattern and instead finished the day 120 pips lower.

Summary: Watch for bearish price action between 1.6070 and 1.610. Key support comes in at the June 2013 high around 1.5730. This gives us more than 300 pips to work with.

GBPUSD 4 hour forex chart event area

EURUSD analysis

EURUSD 4 hour forex chart

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