GBP/USD Breaks Lows. Where Will Price Retest?

October 6, 2016

With this sudden burst of Fed positivity heading into the December meeting, it was Chicago Fed President Evans’ turn to chime in with a headline overnight, adding to the chorus of Fed hawks calling for a hike to end the calendar year.

In the lead up to NFP Friday night, we also saw a mixed bag of economic data hit our screens to accompany Evans’ comments. The notoriously unreliable ADP number slightly missed expectations, but the ISM non-manufacturing activity index reached its highest level since October 2015!

Overall markets have taken this combination as USD positive and Friday is set up for a hugely important release quite nicely.

With the British Pound being pounded (not even sorry for the pun) on the back of news that PM May has set a date for the United Kingdom’s withdrawal from the European Union, we had been watching how price would react to record low levels at 1.2792 on our Vantage FX MT4 charts.

GBP/USD Daily:
161006_gbpusd_daily
Click on chart to see a larger view.

You can see on the daily chart that from Tuesday morning when we published that blog, it has been all downhill from there, breaking support and holding at its new lows.

GBP/USD Hourly:
161006_gbpusd_hourly
Click on chart to see a larger view.

Zooming into the intra-day hourly chart, if you’re a bear then here are some obvious levels to watch for weakness as price inevitably pulls back up to re-test previous support as possible resistance.

If it’s in the direction of the higher time frame trend or after a major support/resistance level has held, these intra-day re-tests always offer great risk:reward in your trading.

Best of probabilities to you!

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On the Calendar Thursday:
CNY Bank Holiday
AUD Trade Balance

USD Unemployment Claims

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Dane Williams – @VantageFX

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