Price extends into the extreme area
The GBPUSD is the dog in the NY session. ON the tumble lower, the pair has fallen below the next target support area in the process.
Looking at the weekly chart above the 2013 lows came in at 1.4811 and 1.4830. Going back to 2010, there were lows in the first half of the year at the 1.4782 and 1.4797. From early May to late June, the price moved into an extreme area between 1.4229 and 1.4782 (red area in the chart above). The price has entered into this area today. Risk for shorts are now against the old low at the 1.4782 level.
The 5 minute chart below is showing the acceleration of the trend move to the downside. The price has moved below the lower channel trend line at the 1.4738 (and moving lower). This is close resistance/ risk for the shorts who are enjoying the trend move lower.
The 1.4782 level above is now not only the low area from the weekly chart above, but is also the 38.2% of the move lower today. With both levels at the same price, that solidifies the area as a key topside risk defining level on corrections going forward. If the price can not extend back above this level, the downside remains the dominant trend.
The pair is in a 187 pip trading range today. That is now well above the 22-day average of 103 pips. The large extension might slow the downside momentum a bit. What might be the next downside target? Going back to 2010, the 1.4686 level was a low going back to June 20, 2010. With not much else to grab onto from a technical perspective, look for this level to stall any further decline, should the momentum continue into the end of the week.
