Visit our website – Ikofx
The British pound suffered heavy losses against the US dollar during this past week especially on Friday after the US nonfarm payroll release. The GBPUSD blasted lower and cleared all major support levels to trade towards the 1.5950 area. The pair is trying to recover some ground as all major technical indicators pointing oversold readings. However, the US dollar dominance might continue, as the recent economic data raise the prospects of a rate hike sooner or later. There is no major economic release in the UK today, which means the London session might be quiet unless something comes up.
There was a descending trend line on the hourly chart of the GBPUSD pair, which was holding the downside in the pair. The pair broke the mentioned trend line and blasted lower. This broken trend line might act as a resistance in the near term, which now coincides with the 38.2% Fibonacci retracement level of the last fall from the 1.6257 high to 1.5952 low. So, if the pair retraces from the current levels, then it might find sellers around the 1.6040-60 area. It is important to note that the mentioned area acted as a support earlier and might act as a resistance in the short term. I think we should not chase the pair and wait for retracement to find a better selling opportunity.
There is also a chance that the GBPUSD pair might not correct higher. In that situation, a break below the last low of 1.5950 could take the pair towards the 1.5910 level.
Overall, one might consider selling around the mentioned resistance area as long as the pair is below the 1.6060 level.