The GBPUSD pair fell again during the session on Tuesday, and quite frankly is starting to press against some pretty significant support. The 1.69 level is essentially the “line in the sand” as far as we can tell, and as a result we would be very short of this market if we get below there on a daily close. At that point in time, we feel that the British pound would search to dissolve, and thereby making it a market that’s correction prone, and that would more than likely fall significantly.

And we break below the aforementioned 1.69 handle, we think that the market will probably head to the 1.67 level next. Below there, we would have the 1.65 handle to contend with, which of course is a much larger number as far as the psychological significance is concerned.

Because of that, we think that the market would more than likely bounce in that region, but recognize the fact that anything can happen between now and then, and shifting the psychological aspect of the market overall.

While we haven’t quite broken down yet, we are certainly hanging by a thread at this point in time, and therefore very hesitant to buy this market, unless of course we get the absolute perfect set of, which would be basically a hammer at the 1.69 handle.

With the employment numbers out of the United States coming on Friday, it’s very likely that this pair will be heavily influenced by them. We will pay attention to this market and see whether or not it is more of a “risk on” or more of a “risk off” type of environment.

This pair typically moves higher with risk appetite, and as a result we will have to pay attention to how the market reacts to the nonfarm payroll number especially, which is the overall economic conditions in general should be paid attention to as well. A supportive candle at the 1.69 handle however would be significant enough reason to take a long position, simply because the risk to reward ratio would be so healthy.

Editor’s Note: Equity investors/traders can use the Currency Shares British Pound Sterling Trust (FXB, quote) ETF to take positions in the yen without a FOREX account.  The ETF looks to track the price of the British Pound Sterling (GBPUSD), minus ETF fee. The fund seeks to reflect the price of the British Pound Sterling (GBPUSD) with the shares representing a cost-effective investment relative to investing in the FOREX market.

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