Tuesday, October 11, 2016

Trading with Trendlines: GBP/USD Today

After the huge drop of the GBP in the end of last week the pair rebounded sharply with 480 pips for about a minute, but it could not stay at that level and slowly continued dropping.

Since yesterday the GBP/USD move to the downside was forming in a clear downwards channel – from 1.24297 to 1.22493 and that continued until today, when the pair started climbing sharply, broke above the resistance trendline of the downwards channel at 1.22811 and continued rising until it reached 1.23285.

I was expecting that the pair would reach the channel’s limit, which is 75 pips, but unfortunately that did not happen.

Under these circumstances it’s possible for the GBP/USD to continue dropping towards 1.22300 – 1.22200 or even below those levels.

How much lower can this pair drop and where will it stop?