Accelerating the fall

The GBPUSD has taken peak below the 1.22000 level (my low bid print is 1.21987 from my broker). In the process, the price has moved away from the post crash low at 1.22249 (now resistance). The price has also fallen below channel trend line support at 1.2222 AND another trend line connecting the recent lows on the 15 minute chart (see blue circles in the chart below). That comes in at 1.2210. The momentum is accelerating on the break of the lower trend lines.

With the market trading below the lowest low post the Friday crash, and also below lower trend lines and lots of air below from the crash, the targets become murky. However, the trading mindset should be

  • The sellers are in control
  • The momentum lower is accelerating below the trend lines
  • Stay below the lower trend lines and let the market run.
  • Move back above the trend lines and the selling may slow/the market may neutralize.

The current price is off the low (at 1.1215 currently). That is above the lowest trend line at 1.1208 but below the swing low from Friday at 1.22249 and the higher trend line at 1.2222. Those areas now create a ceiling that sellers should lean against if the sellers are to remain in full control. If it moves above, the selling might be over - at least for the time being.

When trying to pick a bottom - especially one that fell 1000 or so pips in a matter of minutes two trading days ago - you should only act if the "market" tells you something that you can lean against. Then if it works (i.e. if the support level holds), you need to look for the next targets to keep the corrective momentum going. If it does not, sellers are simply using the corrections to sell rallies.

In trading earlier today, the price held support along the channel trend line at 1.2248. The price moved higher, moved above the topside trend line, but could not extend above the 100 bar MA (blue line in the chart above). When the price fell back below the topside trend line, that was a negative. The trend lower reasserted itself.

So watch the 1.2222- 1.2225 area now. Stay below = more bearish. Move above = a little bullish with work to do (get above 1.2248 next). Another way of putting it, the bearish waters are a bit cloudy/murky/not clear.