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GBP/USD turns red for the year

It is never a good sign for the markets to go from green to red on any time frame. So the fact that the GBP/USD has now turned red for 2018, falling below the opening price of 1.3500, the bias has turned bearish. Admittedly, the year has just started and the overall trend still looks bullish, with the main moving averages for example all pointing higher, as shown on the chart. However, as things stand, the short-term trend has turned negative and we have to put our longer term bullish views on hold for the time being. If and when the GBP/USD goes back above the yearly open price then this would objectively re-establish the bullish trend. The GBP/USD bears now need to see a clear breakdown in the market structure of higher highs and higher lows. The last low was made at 1.3305. So, if this level eventually breaks then we will have more confirmation about the trend change. Meanwhile it is worth pointing out that the momentum indicator RSI is currently in a state of negative divergence, too. What’s more, price is also residing near long-term resistance levels circa 1.35-40 zone. Thus, taking everything into account, the GBP/USD looks set to fall further. But as mentioned we will quickly change our view in the event price pops back above the 2018 opening price of 1.3500, or if we see a significantly bullish pattern at lower levels first. Friday’s release of US CPI and retail sales should have a big impact on the dollar, and in turn the GBP/USD pair, in the event the data deviates meaningfully from expectations.

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