GBPUSD trend line break suggests further downside

April 07, 2016 11:53

We have seen no specific trigger to GBPUSD huge drop as there has been no U.K. data to digest except for Services PMI. Recent BREXIT pools suggest the vote could go wither way as in the recent polls there are 43 % of those who support UK in EU while 41 % think that UK will be better without EU (Source:Financial times). So, fundamentally it seems that bearish bias is all over the GBPUSD market and technical analysis supports the bearish bias too.

1.4130 failed to hold the price substantially in the bullish zone and we can see that H4 important trend line has been broken. The trend line is also thrusting through the range bound zone (red rectangle) and that accounts for POC 1.4135-1.4170. Regular bullish divergence spiked up the price yesterday towards current POC and it seems that the retracement has lost its steam. At this point,the zone is rejecting the price and any pullbacks within the zone could be sold into if bearish trend is to persist. Next target should be 1.4037 and ONLY if we see a 4h close below 1.4000 the door for 1.3885 will be open.

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