The GBP/USD pair fell significantly during the course of the session on Thursday, as we continue to make new lows. This market breaking below the 1.4750 level is a significant move, and the fact that we closed at the very bottom of the range is also very significant as it shows continued bearish pressure in my experience. Given enough time, I do think of this pair goes much lower and I look at rallies at this point in time as simple value propositions when it comes to the United States dollar.
With the US dollar being the most favored currency in the world, it makes sense that this pair should continue to drop. Anytime this market rallies, I will be looking for short-term resistive candles as I think although we will fall, I don’t necessarily believe that it’s going to be some type of major meltdown coming anytime soon. I think it’s just simply the market trying to express its opinion on where interest-rate differential going.
Down Again and Again
I believe that this market continues to go down to the 1.45 level, and quite frankly could even go below there, down to the 1.40 level which has been much more significant on longer-term charts as far as support is concerned. I presently see the 1.50 level as the “ceiling in this market”, and I believe that there is a significant amount of selling pressure in that region just waiting to get involved. It would represent quite a value when it comes to the greenback and I believe a lot of traders will be looking for that. Now that we are entering a new trading here, Forex managers will be putting more money to work, as they would have almost undoubtedly collected profits for the holidays.
Look for short-term rallies to sell, as that is probably the type of choppy behavior that we will see for the first several sessions of the year.
