The 2.000 hurdle was a huge psychological level for the GBP/USD and now that support has been tested at 2.0800 and 2.0780 there is a rallying point for a sustained move higher through 2.0000.
The current resistance level is 2.0900 and even though prices hit 2.0906 prices have pulled back from this level twice. The key is whether buyers will support 2.0900, which currently has not been established as support.
The U.S. Dollar Index has made a new low this morning as prices are heading down to the 76.00 level. With the likelihood of a rate cut continuing to materialize there is little reason to think that 76.00 will be much more than a speed bump as price slide. Fed Fund futures are projecting a 2/3 chance of a 25 basis point cut.
As the GBP/USD tests the 2.0880 minor psychological level, today is the third session in a row that the 2.0900 level has sent prices lower. Keeping this mind there is a good chance that there will be aggressive shorts entered between 2.0880 and 2.0906. If there is a pullback, the 60 minute chart rising wedge pattern will be a great pattern to keep an eye on as the uptrend line support is positioned in the 2.0820 area.
Using Fibonacci levels to project potential resistance, there are two scenarios. The 1.618 Fibonacci in the first Fibonacci chart at 2.0962 shows resistance well in front of the 2.100 level while the second Fibonacci chart shows the 2.618 Fibonacci level at 2.1152.
All charts presented with permission from Autochartist pattern recognition software.
Raghee Horner is a private forex, futures, and stock trader based in South Florida. She is the author of two best-selling forex trading books and a sought after speaker. Learn more about Raghee’s charts here.