GBPUSD continues to look weak after being rejected at support-turned-resistance between September 17th and 18th. Since that time the pair has lost 500 pips and doesn’t appear to be done just yet.
In the bigger picture we can see that a series of lower highs and lower lows has dictated the price action since August. As long as this pattern remains intact, I will be looking for selling opportunities as GBPUSD continues to break down.
Fast forward to today and we can see that the pair has now slipped below the 1.5170 handle on a 4 hour closing basis. This level can be seen acting as resistance on March 18th and later acted as support between May and September.
Today’s close could trigger further weakness and a move to the next support level at 1.50, an area that played a significant role earlier in the year as it acted as support between January and February and subsequently acted as resistance between March and April.
From here traders can watch for a selling opportunity on a retest of 1.5170 as new resistance. The next key support level is 180 pips away at 1.50, which should give us a more than favorable risk to reward ratio on any short setup that might present itself.
More conservative traders can wait for a daily close below the level before considering an entry. A break below 1.50 would expose the 1.4830 handle, a level that can be seen acting as both support and resistance going all the way back to the year 2000.
Summary: Watch for selling opportunities as long as the pair remains below 1.5170 on a 4 hour closing basis. Key support comes in at 1.50, 1.4830 as well as the 2015 low at 1.4580. Alternatively, a close back above 1.5170 would negate the bearish bias in the short-term and open the door for a move back to the 1.5330 resistance level.