Funny how things turn out isn't it?
If we wipe the last 15 odd hours from our minds we'd be right back where we were yesterday.
1.2200-20/25 is support again and 1.2320/25 is resistance.
GBPUSD H1 chart
If only it was that easy though eh? It's not so what have we learnt?
The pound is a boiling kettle right now and what we are getting seeing is a slow heating up and then a big release of pressure. That's what we got last week and that's what we got yesterday. The support that had built around 1.2200/30 was important to watch, as I mentioned yesterday as we hit 1.2200;
"Pure and simply, if we can't get back and hold above 1.2220/30 then there's really only one way we're going and if traders are smelling blood again, we could have another violent move below 1.22. I'm not saying it will be anything like Friday but the low 1.21's could get a very swift visit."
The point I'm making is that we all need to know the type of conditions we're trading and that was highlighted by the blow through 1.22. It was an important point as that's where a proper low was put in after the Friday crunch. That's where traders stepped into another selloff to buy it, so it's obvious that's where there would be a lot of stops protecting those longs.
So we've seen some steam let off again and the pressure gauge is back in the green. We're back between 1.2200 and 1.2500 and now further levels are developing, with 1.2325 now the next to watch. What we also now have is a new low to keep and eye on down around 1.2100/15-1.2075/85. Slowly but surely the market is showing us new boundaries and places we can lower our risk when trading. If you're interested in learning about price action then these moves in cable are priceless for that and we've all got front row seats.
Now if only these moves would happen when I'm in front of my trading screen I might be able to make some money on them ;-)
