We’ve been waiting for GBPUSD to do something interesting for a while now, and today it has finally delivered. Well, in part, anyway.
With disappointing news out today for Claimant Count Change (-12.5k as opposed to -5.3k expected) the pound dropped 75 pips in few minutes and the same again over the following two hours, taking price down to a level not breached since July 2010.
Was this news worthy of a 150pip drop? I doubt it. I think this drop was in part fuelled by the market wanting GBPUSD to hit it’s 1.53 major support level so that it’s forced to choose its bias for the next few weeks or months.
So should we take Cable long now? Well, I think yes but with a caveat.
This move came from nowhere as far as the lower timeframes are concerned so there’s no correlation to back up a reversal. A safer trade would be to wait for higher lows on the 240m chart, particularly as the market has been in the mood for breaking major levels this year so far.
If you’re aggressive you can get in now, if not then wait for some comforting signals on the lower timeframes. In any case, be prepared to reverse your outlook and go short instead should it break 1.5300 and retest this level from below.
It’s decision time for GBPUSD – one to watch closely.