If you are a technical currency trader, then support and resistance levels can provide excellent longer term forex trading opportunities in the spot markets, and the pound vs dollar daily chart is now approaching one of these key levels. For the last few months the currency pair has been bouncing between the 1.67 price point to the upside and 1.58 to the downside, creating a deep level of price congestion, which in turn has created the upper and lower levels of the sideways channel. To date these levels have held, but with the strong sell off in the UK pound of the last few days, we are now approaching the lower level, which to date has provided a platform of support, which has seen daily prices for the pound to dollar pair bounce higher on each occasion that the level has been tested. With the gbp/usd now falling fast, and approaching the 1.58 level once again, and break below here could signal a much deeper move, possibly as far as 1.50 in due course, which should present us with some excellent longer term trading opportunities. The key of course is to wait for the level to be broken by at least 2%, and once achieved then we can enter our trades, confident that any reversal higher now has potential resistance above, which should provide a barrier to any longer term recovery. The pound dollar daily chart is in a classic phase at present with all technical traders now waiting for the break below, whilst swing traders will be anticipating a bounce back higher once again, which is why we need to wait for a confirmation that the support level has been broken.
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