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GBPUSD – Selling Accelerates as Support Broken

The pound has been in decline against the dollar since last summer but the selling appears to have accelerated in the last couple of trading session, which suggests the outlook is pretty bleak.

The pair has traded gradually lower over the last seven months, remaining within the descending channel almost entirely during this period, but it broke below here recently and the pace of selling has picked up since.

GBPUSD Daily [1]

The pair temporarily found support around 1.47, a prior level of resistance, but this was short-lived as the pair failed to break back through prior support and back into the channel only to break back through the day’s lows.

It should also be noted that the failed rally means the marabuzo line of last week’s marabuzo candle was not pierced, which is a bearish signal.

GBPUSD Weekly [2]

With 1.47 now broken, the next significant technical support can be found around last year’s lows around 1.4566. Given how the pair has traded over the last couple of sessions, I would not be surprised to see this come under significant pressure and potentially be broken, leaving cable at five-and-a-half year lows. This could open up a move back towards 1.4230 in the coming weeks.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam [6]

Senior Market Analyst, UK & EMEA at OANDA [7]
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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