Over the weekend I mentioned how the GBPUSD had broken back below the 1.3050 area last week. You’ll note how this area served as resistance in May of last year and later attracted a bid between October and November.
The descending channel that began earlier this year is also still directing the price action. As long as the pair remains in this channel, my bias will be tilted to the downside. That’s especially true given yesterday’s close.
In addition to 1.3050, there’s good reason to have 1.2975 on your chart. If you look back to September 30, 2016, you’ll note that 1.2975 was the location of a gap that remained open for the next seven months.
The area would later repel the June 8, 2017 advance and also serve as a pivot between July and September of last year.
As long as the 1.2975 area holds on a daily closing basis (New York 5 pm EST), the GBPUSD is vulnerable. A close back above the level would re-expose the June 28th low at 1.3050.
Although it’s still early, today’s session is carving what could be an inside bar. It would not come as a surprise given that an inside bar is nothing more than consolidation which is to be expected after a three-day 180 pip drop.
I also wrote on Sunday that a close below the recent July low would open up the 1.2800 area. It’s the intersection of the August 2017 swing low and descending channel support which forms a confluence of support in the region.
In summary, I remain bearish while below 1.2975 on a daily closing basis. The pair may not find much in the way of support until 1.2800. However, shorts should stay vigilant and mind the distance between today’s price and the mean as represented by the 10 and 20 daily EMAs.