GBPUSD is short on rallies

January 20, 2016 10:54

After yesterday's BOE Governor mr.Mark Carney comments where he stated there was no timetable for raising interest rates, GBPUSD fell heavily from POC as sug gested on last Live webinar and in the FXstreet article where I suggested both 1.4225 and 1.4050 levels. The first rejection off 1.4225 made more than 100 pips to the upside but Carney's comments made a huge drop in the exchange rate. In the midst of Chinese growth hitting 25y low we have concluded that BOE is unlikely to raise interest rates soon.

Technically GBPUSD is sold on rallies. 1.4200 has been broken and we should pay attention to a possible retest. The price is in retracement due to regular bullish divergence and 1.4200-10 is looking interesting for intraday shorts. However, better retracement could come at POC which is a tad higher within 1.4235-60 zone. We see a multiple confluence of previous double bottom, 50.0,61.8 H4 and EMA89. The buffer zone for shorts 1.4235-60 is bigger due to a multiple important confluence points. The targets are 1.4124 and 1.4095. If 1.4124 breaks we could see a breakout setup towards 1.4095 without any retracement to the upside. Below 1.4095 we have a very important level which is 1.4050.

So we need to pay attention to 1.4200-10 and 1.4235-60 with a potential breakout of 1.4124.

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