GBP/USD fell again on Tuesday as the markets continue to sell risk overall. The 1.57 level was cracked, and the pair plunged well below it, but the end of day announcement that the presumed next PM of Greece was willing to sign onto an agreement that he intended to keep austerity going forward was seen as a big step in the right direction for the solving of the Greek crisis. So as has been the action lately, the market turned around in the late hours. However, we now have to see how this 1.57 level acts.
At the end of the day, it looks as if it will offer support, but the weekly chart shows that a shooting star was broken to the downside on Tuesday, and this will always be a bearish sign for the pair. The weekly charts overrule the daily ones to us, so because of this we are a bit leery of going long at this point, and will look to see what the next couple of days bring in this market. If we get a break of the lows for Tuesday, we could only interpret that as a sign to sell this pair. The pair will continue to get squeezed between a couple of competing forces as the weekly bears and the 1.57 continue to go back and forth.
The pair should continue to be driven by the events in Europe, as many pairs are these days, and negative headlines will continue to be a danger for the bulls in this market. The area that is trying to hold as support is also the 50% retracement from the fall, and is appears that we may see a bounce at the area. The failure of the EU and Greece to come to terms on the agreement on Wednesday will be vital for the bullishness of this market. If it doesn't happen, the pressure to the downside could be drastic.
The trade for us is to wait and see if the bottom of the Tuesday session gets broken. If so, we are willing to sell. Because of the weekly shooting star in the pair, we are not looking for buying opportunities at this time.
GBP/USD Forecast February 15, 2012, Technical Analysis
GBP/USD Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3