By: Doug Rosen
This pair has been a bit unpredictable. The GBP has been stronger than the EUR, but the USD has been stronger than both. Looking at the weekly chart price is below the 5 ema and on the daily chart we recently retraced to the zone in between the 21.4 and 38.2 fib level, a fib area that I normally don't put too much stock into, but I suppose it was the daily 21 ema that ended the retracement and forced price to continue its bearish trend to the downside. Before price retraced to the daily 21, it double bottomed at the 1.5350 area, and I do remember commenting on that possibility before the fact.
What I am watching very careful at this time is price heading back down to that same area and to see whether or not it bounces back up again or if it finally breaks support and keeps on dropping. We are still 170 pips away from that zone but by all means watch the 1.5350 area very carefully since a reaction will in fact occur at that area. Meanwhile, this bear continues to move bearish. This pair starts its new week off under the monthly and weekly central pivot point as well as below the Friday low.
Price continues to rid the 4 hour and 1 hour 5 ema with lower Bollinger Bands open and pointing down, and the 15 minute 21 ema is overlapping with Friday's low and the 15 minute 21 seems to stay in control when price breaks the 5 and 13 ema's so at this point, with the exception of a bullish retracement here and there I see no reason to think anything but bearish on this pair. One thing to consider when trading this pair is the fact that both the GBP and the USD have been strong and successful trades usually take place when pairing a strong currency with a weak currency, however, this pair is correlating with the EUR/USD which has been bearish so I wouls still expect this pair to stay bearish but entering short positions with this pair has to be timed carefully. Enter positions off of Fibs overlapped with ema's and/or pivot points would be the safest way to trade this pair down to the 1.530 area.
