Market Condition: Breakout
Target 1: 1x Bar Extension at 1.5536
Target 2: 2x Bar Extension at 1.5410
Target 3: 50% Retracement at 1.5248
Target 4: 61.8% Retracement at 1.5087
Invalidation: 1.5336
GBPUSD 1Day Chart
(Created using Marketscope2.0 Charts)
Since last week, the GBPUSD has broken out of its inside bar formation, and traveled through its first two targets at 1.5536 and 1.5410. As of yesterday, the pair continues to move lower, and has broken through a daily trendline as seen on the graph above. This breakout adds to the technical case for further GBPUSD weakness. As prices decline, the next values of support can be found using Fibonacci retracements. This would mark next support at the 50% Fibonacci value at 1.5248, and in the event of a further decline at the 61.8% retracement value at 1.5087.
In the event that the market fails to continue its move lower, traders will watch for prices to return inside of the markets previously declining trendline. If price moves back to 1.5332, the current breakout scenario would be considered invalidated. Traders can also use whole number resistance values such as 1.5400 and 1.5500, to help identify any potential market reversals.
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