Daily Pivots: (S1) 1.3040; (P) 1.3114; (R1) 1.3153; More…
GBP/USD drops to as low as 1.3013 so far today. The break of 1.3042 resistance turned support confirmed our view that corrective rise from 1.2661 has completed at 1.3297, ahead of 1.3316 key fibonacci level. Intraday bias is back on the downside for 1.2784 support first. Break will likely resume larger down trend from 1.4376 through 1.2661. On the upside, above 1.3089 minor resistance will turn intraday bias neutral and bring consolidation, before staging another decline.
In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA (now at 1.4062). The structure and momentum of the fall from 1.4376 argues that it’s resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.
