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GBP/USD Marks a New Low on the Year

GBP/USD was bullish in much of February but found resistance at 1.5550. Then, there were signs that the bullish correction was over when price fell below 1.54 and February's rising trendline. Then, after last Friday's US jobs report, GBP/USD fell below a key support/resistance pivot around 1.52 and the daily RSI fell below 40. It also returned below the 50-day simple moving average (SMA). These were even stronger signs of bearish continuation.

GBP/USD Daily Chart 3/11
(click to enlarge)

this week after a couple of sessions of consolidation (Monday and Tuesday), the Wednesday (3/11) session saw another push that broke the previous low on the year at 1.4950. There are some intra-session support at 1.49, but the risk of falling even lower is great given that the prevailing downtrend is intact, and given the current monetary policy projections for the the BoE vs. the Fed.

Still, it won't be further lower before GBP/USD hits a major support around 1.4815, the 2013-low seen in the weekly chart.

GBP/USD Weekly Chart 3/11

(click to enlarge)

In the weekly char twe can see that while the trend has been bearish since mid-2014, it is essentially sideways since 2012. The fact that the moving averages are moving sideways adds to the picture of a sideways market. Therefore, if the RSI is below 30 (oversold), we should be careful of adding too much exposure to the downside. If we get a bullish divergence over the next couple month with price finding support above 1.48, we should consider another medium-term bullish correction.