The GBP/USD pair has been very sick looking for a while now. The fall has been relentless as the Dollar has been king over the last several weeks during the latest concerns out of Europe. The Pound will suffer as this pair is a risk related market, and the fear out there is certainly real. The issues in Europe seem to be never ending, and as a result it is difficult for me to buy the Pound or other such “risky” currencies.
The candle for the Tuesday session looks weak and like we aren’t ready to give up selling just yet. In fact, until the banks (at the very least) in Spain get capitalized, there is little chance I am willing to step out very far in the risk parameter. This pair is included, and as a result I feel that selling the Dollar is the riskiest trade at the moment.
1.65
The 1.65 level was tested on Tuesday, but the level held so far. The fall to the level was quick, but the bulls stepped into the market in order to hold the market up. This level is also the 61.8% Fibonacci retracement level from the bottom, so it truly will be important for the Fibonacci traders as well. The level has been supportive in the past, and looks to be important for the bulls at this point as well. It is below this level that I start to get aggressive in my shorting of this pair.
The pair could certainly bounce from here, and this wouldn’t be a surprise. But with the way a lot of other “risk related” assets looks right now, I am not looking for a big bounce at all. In fact, I am ready to sell the first signs of weakness after a rally in order to profit from this very bearish market.
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A daily close below the 1.56 has me shorting aggressively as well. As for buying, I simply don’t see the case for it as I wouldn’t even be convinced until we got above the 1.60 level at this point. The world is full of financial risk at the moment, and I am not willing to push my luck.