The GBPUSD was already on the backfoot as the pair continued to fail at 1.6400/30 as we noted yesterday. The pair fell on technicals to 1.6250 but it was the news of US downgrade that sent the pair through the 1.6240 support to make new lows at 1.6160. Now that targets were met, let’s reasses the pair to see what cable could be offering next.
Price fell between the 50% and 61.8% Fibonacci retracement levels hitting our targets at 1.6250 and 1.6180. The 61.8% Fibonacci level at 1.6146 did hold suggesting that the pair is ready to reverse back higher to make new highs above 1.6430 highs. However, before bulls start to get ahead of themselves, study today’s price action on the 5 minute chart.
The correction off the lows can rally all the way to 1.6266, the 61.8% Fibonacci retracement level of today’s breakdown, and still be considered bearish. Further support to bears would be a daily close below 1.6250. Only a close above 1.6266 would change my bearish view of this pair.
Bears target 1.6110/00 next on the daily chart. A break below 1.6100 targets 1.6000.
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