The retracement level is now close risk for shorts looking for more downside
The GBPUSD fell sharply on the Bank of England decision. The pair initially moved down to test the 61.8% retracement near 1.35725 and a swing low from October 12 at 1.35677. However that area was broken and the price scooted even lower to 1.3531 -1.35434 area.
The price is in a consolidating area (between 1.35188 and 1.35538) where swing lows and highs were formed from September 28 to October 6 (before a move further to the upside). So far, a intermediate swing level at 1.3531 is stalling (ahead of 1.3518).
What now?
I would expect that the sellers would now use the 61.8% retracement 1.35725 as a close risk level intraday. Move above that level and some of the shorts may look to cover with 1.3600 to 1.3608 as the next target resistance area.
Conversely, stay below the 61.8% retracement, and the sellers hold control with the caveat that the aforementioned swing lows need to be broken. Doing so, would take the pair into the extreme low area down to 1.3411 (PS. That low from the end of September was the lowest level going back to December 2020). That level would be the target on a break into that extreme area.
