In fact, it’s the first bearish outside week at a swing high since the rally began 18 months ago. If that isn’t a sign to stay away from the buy side, then what is.
That said, sellers have gotten ahead of themselves. Last week’s four-day plunge puts the GBPUSD 120 pips below the daily mean as measured by the 10 and 20 EMAs. Therefore, an early bid this week wouldn’t be a surprise.
But just like the EURUSD, we are interested in selling strength. If buyers can manage another retest of the 1.4080/90 area this week, a short entry for a move back to 1.40 and perhaps 1.3915 can be entered.
Alternatively, a daily close (using a New York close chart) below 1.40 would open up the 1.3915 area. A close below that would bring us back to the February and March lows near 1.3780.
