GBP/USD - break below key level of 1.3000

Yesterday GBP/USD price broke through the key technical level of 1.3000 and posted it's first lower low on the 4H timeframe since late July. Today price looks to be returning to test the 1.3000 support turned resistance zone, which is also in confluence with the weekly descending trend line. As a result of this confluence we are expecting a strong rejection from this zone followed by a further bearish movement with little in the way of support until 1.2750 - which would provide a brilliant R:R. We will wait for rejection from this level and then look to take a short position.

The strong bullish movement seen on this currency pair and a weakened dollar can not be ignored so we need the further confirmation before entering. Not until price has broken through the support at 1.2750 could this pair be considered to be back in a bearish trend which is why a greater certainty is needed.

A break and close above 1.3000 would invalidate our analysis and we would no longer be looking to take a short opportunity.