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On Saturday, I made a video that included the GBPUSD and the effect Friday’s sub 1.3340 close could have on the pair.
I stated that Friday’s close means 1.3340 is still intact as resistance and could, therefore, attract sellers this week.
Notice how Monday’s session carved a long upper wick.
That was further evidence that 1.3340 was still holding as resistance for the pair.
Today’s selloff is confirmation that sellers aren’t giving in just yet.
If you watched Saturday’s forecast video, you know that 1.3340 is a long-term range top for the GBPUSD.
So if the pair was going to selloff on the way up, that’s where I’d expect it to happen.
We also have what appears to be an ascending channel that extends from the year-to-date low in September.
If this channel is any indication of the pound’s future direction, we could see prices rotate lower, perhaps much lower.
That wouldn’t be a huge surprise, though.
The GBPUSD has had a heck of a run, including the most recent breakout from the 1.2980 range top on December 3rd.
In fact, the pair is still up 1,190 pips since its year-to-date low from just fifteen weeks ago.
Given the aggressiveness of today’s selloff, I wouldn’t be surprised to see the GBPUSD test 1.2980 this week.
However, I do think it’s going to take a sub 1.3150 close to do it.
And if this retracement really gets going, we could see a retest of ascending channel support, which is currently near the 1.2770 area.
This doesn’t mean the GBPUSD short-term rally is over, but today’s selling pressure does suggest the pair is ready to pull back, in my opinion.