The Pound broke the support specified in yesterday’s report 1.5405, and dropped exactly as expected to reach 1.5326, which was not enough to meet our suggested target which was pips below 1.53. With this break this pair has left the “neutral zone” which we said is between 1.5587 & 1.5441. Therefore, it is only logical now to expect the Pound to dive. But after more than 240 pips down from yesterday’s top, the price is subject to a short term correction, with a condition of staying below 1.5480. The Pound is notorious for breaking, then moving in the other direction, before moving in the right direction smoothly and strongly. Short term support is at 1.5382, which we are trading just above as this report is prepared. If broken, the Pound will continue to fall, and it will target 1.5293 & 1.5224. On the other hand, we could see a correction up to 1.5480, without changing this negative outlook. But if the Pound manages to break the resistance 1.5480, our negative outlook will suffer, and the price will shoot up to the very important 1.5596, and the most important 1.5757.

Support:

• 1.5382: short term 38.2% Fibonacci level.

• 1.5293: Jul 22nd high.

• 1.5224: Jul 6th high.

Resistance:

• 1.5480: Fibonacci 61.8% for the drop from Monday’s top.

• 1.5596: Aug 26th high and the slowly falling trend line from Aug 16th top.

• 1.5757: Fibonacci 61.8% for the drop from Aug 6th major top.