By: Colin Jessup
Earlier this month I wrote about the S/R zone of 1.5950 giving the Sterling some grief and predicted that if that zone broke we would see to the Sterling fall to 1.5630 or lower. Well, this has now happened and the pair has found itself in a zone where it spent significant time previously, back in 2010. Several times it found both support & resistance at the zone surrounding 1.5400. In September & October of 2011, we again saw the GBP/USD find support at this same level before reversing its Bearish Trend and running with the Bulls back up to the 1.6100+ level. Now, it has once again returned to 1.5400 +/- and the question of the day is...will support hold once again and give the Bulls another run, or will it finally break through this stubborn support zone and fall further? My bet for the short term is a possible re-test of the weekly resistance zone at 1.5575 before falling and testing the October 06 low 1.5270. If that low breaks we could see a strong bearish run down to 1.4900 and eventually 1.4200 which was last seen in May 2010. If price turns Bullish look for resistance at 1.5575, 1.5755 and again at the weekly S/R zone once again at 1.5950.
Happy Trading!
