Review and dynamics
Today’s sharp decline in the pound suggests that investors’ attitude to it is negative.
It seems that the speech by Francois Hollande and the broken stop-sell orders caused the decline in the pair GBP/USD to the new historic lows. Within a minute, the pair GBP/USD fell by more than 600 points, or 8%, and then rebounded from the lows by 400 points.
At the beginning of the European session the pair GBP/USD traded close to the level of 1.2460, which is by 160 points lower than today's opening price.
At the beginning of this month the pair GBP/USD has broken down the lower limit of the range at the level of 1.2875 and continues to decline.
The level of 1.3365 (the upper limit of the range) or Fibonacci 23.6% after the decline in the pair after the Brexit referendum; the level of 1.2875 is the lows of 2016.
The pair GBP/USD has been traded in this range since the beginning of July.
The difference in the monetary policies of the Bank of England and the US Fed and fears about the prospects of the UK economy cause further decline in the pair GBP/USD, which has already reached the lows of the past 30 years.
On daily, weekly and monthly charts the indicators OsMA and Stochastic give signals for short positions. On 4-hour chart Stochastic gives buy signal, indicating probability of the correction.
Today at 15:30 (GMT+3): important US data will be released including nonfarm payroll for September at 17:00 the UK data NIESR assessment of GDP growth.
The pair GBP/USD can change movement in either direction. Given strong decline in the pair GBP/USD, the price can sharp rebound.
In anticipation of the important statistics, technical analysis may be irrelevant.
The rise in the pair GBP/USD can be possible only if the price goes above the level of 1.2875.
Yet, short positions are preferable.
Downtrend in the pair GBP/USD will change if the price breaks down the level of 1.3365 and goes up to 1.3630 (lows of 2009 and 2001 closing price of “black Friday)” and 1.3655 (Fibonacci 38.2%).
Support levels: 1.2395 and 1.2300.
Resistance levels: 1.2450, 1.2500, 1.2615, 1.2795 1.2875 and 1.2900.
Sell on the market. Stop-Loss: 1.2485. Take-Profit: 1.2395, 1.2300 and 1.2200.
Buy Stop: 1.2490. Stop-Loss: 1.2440. Take-Profit: 1.2520, 1.2615, 1.2795 1.2875 and 1.2900.
Decline by almost 600 points within one minute
Stochastic gives buy signal