Pound-Dollar At Critical Point
Alexandros Yfantis | Dec 18, 2017 10:31AM ET
GBP/USD will soon provide a new trend signal, as price is trapped in a tightening price range below 1.35 and above 1.33. Although I favor the bearish scenario of a move below 1.30, we need to keep an open mind in case resistance at 1.35 fails to hold. This will be a bullish sign for a move toward 1.3850-1.40.
Price is making higher highs and higher lows since late 2016 on a weekly basis. However since late November, the price stopped making higher highs and made a lower high at 1.3552. Price so far has respected both the black upward-sloping TL and has been rejected twice at the blue downward-sloping, long-term trend line. Resistance is at 1.3455-1.35 while support is at 1.33-1.32. The February 2016 lows at 1.38-1.40 area is my target if we break above 1.35.
Taking a closer look at the pair, we see lower lows and lower highs since the high of November 30. This sequence of lower lows and lower highs could unfold into something much more bearish, so bulls need to be very cautious. I prefer being short as long as price is below 1.35.
Confirmation of my view will come with the break of 1.32. First target will be around 1.27. If certain conditions are met, we could even see a new low below 1.20. We'll revisit the pair in time and only if price reaches 1.27.
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