The GBP/USD pair is a very risk-sensitive one. The Spanish announced on Friday that the debt in that country is going to expand further than agreed upon with the rest of the members in the EU, and as a result the risk off trade came into play. This skewed the week for the Pound, and printed a shooting star just above the all-important and obvious 1.58 level. This action was indicative of a Dollar rally across the board as the world simply cannot get away from the issues in Europe.

The UK is heavily exposed to Europe, with over 40% of its exports heading into that region. Also, the UK banks are heavily exposed to debts in that area as well, and with the banking sector being so important in the UK, it only makes sense that the Pound would lose some strength as a result.

The 1.58 level has been both support and resistance in the recent past, and as a result has become a bit of a focal point. This area continues to attract price, and the recent candles show a real back and forth battle going on in the area. The shooting star form this past week was preceded by two hammers, and another shooting star. This suggests that perhaps the pair is going to chop around in this area, but that a significant move is coming soon.

The breaking below the 1.5650 level would be very bearish for this pair, and as a result we would become materially short of this pair if that happens. A simply daily close would be all that we would require, and at that point 1.53 is a given, with the level being an even more vital point for the bulls in this pair. If the area were to give way- this pair would probably see 1.40 eventually.

As for the upside, we are waiting to see a post-1.60 print on the daily chart to get constructive for the long term. It isn't until we get that price that we would consider being a long-term owner of this pair.

GBP/USD

GBP/USD Forecast for the Week of March 5, 2012, Technical Analysis

GBP/USD Pivot Points (Time Frame: 1 Day)

 Name  S3  S2  S1  Pivot  R1  R2  R3

 Classic
1.5826
1.5831
1.5836
1.5841
1.5846
1.5851
1.5856

 Fibonacci
1.5831
1.5835
1.5838
1.5841
1.5845
1.5848
1.5851

 Camarilla
1.5837
1.5838
1.5839
1.5841
1.5841
1.5842
1.5843

 Woodie's
-
1.5831
1.5835
1.5841
1.5845
1.5851
-

 DeMark's
-
-
1.5849
1.5843
1.5838
-
-