Recent days has seen the GBPUSD fall sharply from range highs near 1.44. The selloff was almost inevitable, with impact of Brexit still weighing on traders, combined with the general broader strength in USD buying and, of course, resistance near 1.44.
The fall was further fuelled by weaker-than-expected economic releases in the UK in recent days.
Today saw the break of an important support near 1.3730-1.3740 area, which is marked by the top line you see in the chart below. The big fall from this area possibly suggests we could see further falls, possibly to around 1.35.
We could potentially find some weak support where we are currently (the thick line), but more likely is we well be headed to 1.35, or even as low as 1.34. The 1.3400 to 1.3500 area could offer strong support, as that area has acted previously as both resistance and then support quite recently.
We are now at or near a demand zone. This is an area from which the price rose up sharply into the range that we have been these last two months. We have now seen the opposite, where the price has fallen back to this general area by spiking sharply down through the previous support near the 1.3730 region.
Possible Long Here
There is a possible play here on the GBPUSD. We could go long provided there is a signal either on the daily or the 4-hour chart. The 4-hour candle has to offer a strong reversal signal. If we don’t get it then we shouldn’t go long yet. We will then wait and see what transpires on the daily chart. Any hint of reversal on the daily (it doesn’t have to be a very strong signal) could be construed as an opportunity for long considering we will have candle and strong support confluence.