Traders Remain Focused On Brexit And U.S. Stimulus Talks
GBP/USD is trying to continue its upside move while the U.S. dollar is gaining ground against a broad basket of currencies.
Yesterday, GBP/USD rallied on hopes for a Brexit deal. Traders believe that EU and UK will intensify their negotiations and reach a compromise deal in the upcoming weeks.
Meanwhile, the U.S. Dollar Index remained volatile as traders evaluated the chances of a new U.S. stimulus deal. The U.S. Dollar Index tested the support level at 92.50 but rebounded closer to the nearest resistance at 92.80 after U.S. President Donald Trump accused Democrats of not willing to compromise.
In addition to U.S. stimulus talks and Brexit chatter, traders will focus on U.S. employment reports. U.S. Initial Jobless Claims are expected to decline from 898,000 to 860,000 while Continuing Jobless Claims are projected to decrease from 10.02 million to 9.5 million.
Recent reports indicated that U.S. job market recovery has stalled, and it remains to be seen whether Initial Jobless Claims will stay below 900,000.
GBP/USD managed to settle above the resistance at 1.3110 and is trying to continue its upside move. The next resistance level for GBP/USD has emerged near 1.3180.
If GBP/USD settles above this level, it will head towards the next resistance at 1.3270. RSI is in the moderate territory despite the strength of the recent upside move so there is plenty of room to gain additional momentum in case the right catalysts emerge.
I’d note that there are no significant levels between 1.3180 and 1.3270 so GBP/USD may quickly get to the test of the resistance at 1.3270 if it manages to settle above 1.3180. In case GBP/USD moves above 1.3270, it will head towards the resistance level at 1.3320.
On the support side, the previous resistance level at 1.3110 will likely serve as the first support level for GBP/USD. A move below this level will open the way to the test of the next support at 1.3070. If GBP/USD declines below 1.3070, it will head towards the support at 1.3030.
USD/CAD is trying to settle above the nearest resistance at 1.3135 as weak oil price offsets U.S. dollar’s weakness against a broad basket of currencies.
The U.S. Dollar Index declined below the support at 92.80 and tested the next support level at 92.50 amid hopes for a new U.S. coronavirus aid package. The U.S. dollar was especially weak against the British pound which rallied on improved chances of a Brexit deal between EU and UK. If the U.S. Dollar Index continues its downside move and settles below 92.50, USD/CAD will find itself under pressure.
Today, Canada reported that Inflation Rate increased by 0.5% year-over-year in September compared to the analyst consensus of 0.4%. Core Inflation Rate grew by 1% while analysts expected growth of 0.7%.
Canada’s Retail Sales grew by 0.4% month-over-month in August compared to analyst consensus which called for growth of 1.1%. On a year-over-year basis, Retail Sales increased by 3.5%. Most likely, Retail Sales growth was weaker than expected as consumers remained cautious due to the coronavirus pandemic. This trend will likely continue as the virus situation has not improved since August.
USD to CAD did not manage to settle below the support level at 1.3100 and is trying to get back above the nearest resistance level at 1.3135.
If this attempt is successful, USD to CAD will gain additional upside momentum and head towards the next resistance level at the 20 EMA at 1.3200. There are no significant levels between 1.3135 and 1.3200 so this move may be fast.
A successful test of the resistance at 1.3135 will open the way to the test of the next resistance level at the 50 EMA at 1.3235.
On the support side, USD to CAD needs to get below the support at 1.3100 to continue its downside move. In case USD to CAD manages to settle below this level, it will gain downside momentum and decline towards the next support level at 1.3050.
A move below the support at 1.3050 will signal that USD to CAD is ready to test the support at September lows at 1.3000.
Fitness centers around the world are shutting down at a rapid pace, unable to pay the rent due to COVID-19 restrictions. Investors have taken note, bidding up online fitness provider Pelotin Interactive Inc. (PTON) nearly eight-fold since the March low. The latest rally wave posted an all-time high near 140 and reversed last week, setting the stage for a pullback that could offer a low risk buying opportunity.
Peloton Pullback Trading Strategy
As it turns out, the company reports fiscal Q1 2021earnings on Nov. 3, with analysts expecting a profit of $0.15 per-share on $732.15 million in revenue. The stock sold off for two days in September despite beating Q4 estimates and then turned sharply higher, rewarding pullback buyers. A similar trade set-up could unfold this time around because the report is likely to attract another crowd of weak hands who need to be shaken out.
KeyBanc Capital Markets analyst Edward Yruma raised their Peloton target from $120 to $160 on Wednesday, commenting “We think investor attention will focus on companies leveraged to a post-COVID-19 reopening but PTON will remain a beneficiary due to the contraction in the traditional fitness space. Our Key First Look Data points to <60% retention for many leading fitness chains, which will further exacerbate closures. Demand (new and Bike+ upgrades) remains very strong and marketing leverage could be greater than previously forecast.”
Wall Street And Technical Outlook
Wall Street consensus is highly bullish, with a “Strong Buy’ rating based upon 21 ‘Buy’ and 2 ‘Hold’ recommendations. One analyst recommends that shareholders close positions and move to the sidelines at this time. Price targets currently range from a low of just $33 to a Street-high $160 while the stock is now trading about $7 above the median $121 target. However, it’s dropped more than $10 since last week and could hit the median target before the earnings date.
Peloton is losing momentum and has now completed a head and shoulders pattern on the 60-minute chart. Accumulation readings are rolling over at the same time, indicating that caution is growing ahead of the quarterly confessional. Daily relative strength readings could be at or near oversold levels by that time, supporting the post-report pullback strategy. Just keep in mind that earnings will be reported on the afternoon of Election Day, adding a measure of volatility.
The S&P 500 initially pulled back during the trading session on Wednesday, but then turned around to rally towards the 3450 handle. This is a market that continues to be paid attention to stimulus, and you can make an argument for the possibility of a bullish flag at this point. However, the biggest problem with technical analysis right now is that it simply can tell you where the buyers and sellers might be, but one Tweet or stupid, it could throw everything into disarray.
S&P 500 Video 22.10.20
The 3400 level underneath is massive support from what I can see, because it was massive resistance previously. The 50 day EMA sits underneath and is rising overall, so it should offer support of action, and at this point in time it is likely that the market will attract quite a bit of attention. After that, there is an uptrend line that should keep this market going higher as well. Quite frankly, you do not short indices at this point, because they are so highly manipulated. You buy dips, and you take advantage of value as it occurs.
Looking at this point in time, the market continues to see a lot of volatility, because quite frankly you cannot move on the earnings, not that we have over the last 12 years for the most part, and you cannot move on the US dollar, unless of course you believe that stimulus is going to be huge. At this point, with the election looming large, there are a multitude of potential bad outcomes in both directions. Buying dips makes the most sense but I would not do so with big amounts of money.
Silver markets have rallied significantly during the trading session on Wednesday, to reach towards the $25.50 level. This is an area that could offer a bit of resistance, but it is likely that this will come down to the US dollar and perhaps even more importantly, stimulus going forward. If the market continues to see stimulus as being likely, then it makes quite a bit of sense that the US dollar would fall, thereby putting upward pressure on silver itself. With that in mind, pay close attention to the news flow coming out of Washington DC about stimulus.
SILVER Video 22.10.20
That being said, another thing that you can do to simplify the situation is simply watch the US Dollar Index, as it tends to run inverse of precious metals, and silver is highly sensitive to it as a result. With that being the case, and the fact that the contract is extraordinarily thin, people should be paying close attention to how things correlate, as the markets are essentially running on stimulus and stimulus only. Nothing else seems to matter, and sometimes that is just how the markets behave. They focus on one thing and then move on to the next.
At this point, demand is totally irrelevant, and of course even though the idea of stimulus increasing demand is a bit of a farce, the reality is that the market is moving on that narrative. Keep in mind, this will be the fourth stimulus package that we have had, and it does not increase demand for things like crude oil, so it is difficult to imagine how silver will see more industrial demand. As far as being a hard asset in avoiding fiat destruction, that of course is a completely different story.
The West Texas Intermediate Crude Oil market continues to have nowhere to be, as we can see on the daily chart. The 200 day EMA is sitting at roughly $41, and that seems to be an area that people are paying quite a bit of attention to. That being said, I believe that the market will more than likely go back and forth for a while, at least until we get some type of solution with stimulus in the United States. Quite frankly, that will probably push oil higher, at least for the short term. The $43.50 level above offers resistance, and a break above there could open up the door to the $45 level.
Crude Oil Video 22.10.20
Brent markets also could put you to sleep if you pay too much attention to them. We continue to go sideways around the 50 day EMA, with nowhere to be due to the fact that we do not know about stimulus, we do not know about whether or not OPEC plus will continue to cut production, and of course demand is still a major question. Looking at this chart, you can make an argument for a return to the $42 level, but if we break down below there then we could go down to the $40 level. Alternately, if we break the highs of the last several sessions around $43.50, then we will go looking towards the 200 day EMA which is just underneath the $45 level. With this, we are essentially in “no man’s land.”
Natural gas markets have rallied a bit during the trading session on Wednesday, reaching above the $3.00 level, an area that of course is a large, round, psychologically significant figure that people will be paying attention to. With that being the case, the market looks as if it is ready to continue to see a lot of volatility, and I think that given enough time we probably take off to the upside as demand will continue to be a major pick up. After all, the temperatures in the northern hemisphere should continue to drive lower, and therefore drive more demand.
NATGAS Video 22.10.20
The natural gas markets have quite a bit of support underneath near the $2.80 level, so I think that pullbacks will probably be bought into. After that, the question then becomes how much higher can we go? The initial target for me is going to be the $3.10 level, but I believe that we are probably looking more realistically at a move to the $3.50 level before the winter is over. During this time a year, I have no interest whatsoever in trying to short the market, so I look at pullbacks as potential buying opportunities.
This will be especially true if we do break down below the $2.80 level and start looking at the 50 day EMA which is currently just below the $2.60 level. At this point, I continue to think that natural gas is a market that you buy on dips and simply let it rise to take your profits occasionally. Remember, natural gas is highly sensitive to the short-term weather outlook as well.
For a look at all of today’s economic events, check out our economic calendar.
Gold markets have rallied during the trading session on Wednesday, breaking towards the $1935 level. This was an area that had seen selling pressure previously, so it should not be a huge surprise to think that perhaps we are going to pull back just a little bit. Having said that, we are moving solely on the idea of stimulus and nothing else, as it is by far the biggest headline. If the US dollar gets clobbered, and right now it certainly looks as if it is going to, that should continue to push the gold markets towards the $1960 level above.
Gold Price Predictions Video 22.10.20
The 50 day EMA sits just below the candlestick for the day, which of course could give more credence to the idea of going higher. At this point, the $1900 level looks to be supportive, but even that is somewhat tentative if we do not get stimulus or some type of major move in the US dollar to the positive side. If we break down below there, it is likely that we are going down to the $1850 level where we had bounced from previously.
After that, the $1800 level is massive support that I would be all over and would be willing to be very aggressive around. The 200 day exponential moving average sits just below that level, so it is quite literally the indicator that some traders will use to define the overall uptrend. At this point, the market is trying to break out, but you may need to look for short-term pullbacks in order to pick up little bits and pieces of value.
U.S. Crude Inventories Declined By 1 Million Barrels
Yesterday, API Crude Oil Stock Change report indicated that crude inventories increased by 0.58 million barrels. However, today’s EIA Weekly Petroleum Status Report showed that crude inventories decreased by 1 million barrels, suggesting tha the downside trend in inventory levels continued.
While API Crude Oil Stock Change reports have a short-term impact on the market, EIA reports have more influence.
According to EIA, gasoline inventories increased by 1.9 million barrels while distillate fuel inventories decreased by 3.8 million barrels. Most likely, traders will be alarmed by the increase of gasoline inventories which suggests that gasoline demand recovery has stalled.
U.S. domestic oil production declined to 9.9 million barrels per day (bpd) as the negative impact from hurricanes persisted. It should be noted that crude inventories declined by just 1 million barrels while U.S. domestic oil production was down by 0.6 million bpd, so oil demand in the U.S. remained muted.
In total, this was not a bullish report despite the decrease in crude inventory levels. Gasoline inventories increased, and it looks like demand remains soft.
Oil Continues To Ignore The Recent Developments In Europe
While oil is losing ground today after an unsuccessful attempt to settle above the resistance at $41.50, it has managed to show material strength in recent days despite the alarming news from Europe.
Currently, European countries struggle to contain the second wave of coronavirus and are forced to introduce new restrictions.
The latest news on this front came from Czech Republic, where government decided to shut all non-essential shops and limit movements to essential trips in order to deal with the rising number of new cases.
Current data shows that countries like UK, France, Spain, Italy, Poland, Belgium and Netherlands have significant problems on the virus front, and the introduction of new anti-virus measures looks like a plausible scenario.
However, it remains to be seen whether oil traders will pay attention to the latest developments in Europe or focus on U.S. stimulus negotiations and the recent weakness of the U.S. dollar. A weak U.S. dollar is bullish for dollar-denominated commodities like oil and could provide some support to oil at a time when the future pace of demand recovery is under question.
Silver Gains Ground As U.S. Dollar Continues To Move Lower
Silver gained strong upside momentum and continues its upside move as the U.S. dollar is losing ground against a broad basket of currencies.
The U.S. Dollar Index declined below the support at 92.80 and is trying to get to the test of the next support level at 92.50. The key driver for dollar’s downside move is the strong performance of the British pound, which is gaining ground amid signs that EU and UK will continue to work on the Brexit deal.
In case the U.S. Dollar Index settles below the support at 92.50, silver will get additional support. Weaker dollar is bullish for silver as it makes silver cheaper for buyers who have other currencies.
Meanwhile, gold managed to get above the 50 EMA at $1905 and is moving towards the next resistance level at $1930. If gold moves above $1930, it will gain upside momentum and head towards the $1950 level which will be bullish for silver and other precious metals.
Gold/silver ratio continues to lose ground and is declining towards the nearest support at 75.50. This is a bullish development for silver.
Silver is currently testing the nearest resistance level at $25.00. If the test of this level is successful, silver will gain additional upside momentum and head towards the next resistance at the recent highs at $25.55.
There are no material levels between $25.00 and $25.55 so this move may be fast in case the U.S. dollar continues to lose ground against a broad basket of currencies.
If silver moves above the resistance at $25.55, it will quickly get to the test of the next resistance level at $25.85.
On the support side, the nearest support level for silver is located at the 50 EMA at $24.55. If silver declines below the 20 EMA, it will gain downside momentum and head towards the next support level at $23.90.
A move below the support at $23.90 will signal that the current upside momentum has come to an end. In this case, silver will head towards the next support at $23.30.
Forex traders seem to be content in assuming that there is going to be stimulus coming out of the United States. This is showing up in the USD/JPY pair during the trading session on Wednesday, as we have seen the market break below the ¥105 level rather early in the day. That being said, the market looks as if it is ready to continue drifting towards the lows, something that I have been talking about for a while. However, I was a bit surprised to see the market break through there as quickly as it did.
USD/JPY Video 22.10.20
To the downside, I believe that the ¥104 level is probably the next target, as it has caused a bounce the last couple of times we have been down there. Breaking through their opens up the possibility of a move down to the ¥102 level, which was an even more important support level in the past. That being said, I would not expect to move much lower than that before the Bank of Japan will start to take action.
They are one of the most active central banks out there with perhaps the exception of the Swiss National Bank when it comes to trying to keep their currency relatively cheap. However, as the Federal Reserve has such a loose monetary policy and there is the possibility of massive stimulus coming out of Washington DC, that will put downward pressure on the greenback overall, probably even more so than even the Bank of Japan can handle. We clearly are in a downtrend and that continues.
The British pound has rallied early during the trading session on Wednesday, reaching towards the crucial 1.31 handle. The question now is whether or not it can sustain the move? If it can, and perhaps break above the 1.31 level on a daily close, the market is likely to go looking towards the 1.33 handle next. However, we still have the same jitters that we have had forever when it comes to Brexit and all things involved in that mass, so it is not too difficult to imagine a scenario where somebody says something that has the market selling off again. Occam’s razor dictates that all things being equal we should see the most logical outcome, and right now it looks like we will eventually try to break out to the upside but in the short term consolidation is what I have to assume.
GBP/USD Video 22.10.20
To the downside, the 1.2850 level has offered significant support as of late, so unless there some type of event in the financial world I anticipate that we should stay above there. If we do break down below there, then the next target will almost certainly be the 200 day EMA which is closer to the 1.2750 level underneath.
That would be a major breakdown if we were to slice through it, so certainly something worth paying attention to if it happens. At this point, it certainly looks as if the resiliency of the British pound should be something to be noted.
The British pound rallied initially during the trading session on Wednesday but has given up some of the gains towards the top of the range yet again. The ¥138 level above looms large as resistance, so if we continue to struggle in this area, I think we could very well see a bit of a pullback. Do not get me wrong, I am not calling for some type of meltdown, only a simple continuation of the overall consolidation that we have seen. After all, Brexit still looms large and causes major issues when it comes to holding the British pound.
GBP/JPY Video 22.10.20
At this point, I think the market is simply going to continue to go sideways and look a bit lost, because quite frankly this is a very risk sensitive pair, and of course with Brexit willing to drop a bomb at any given moment, it is a bit difficult to get overly excited. Furthermore, the USD/JPY pair has collapsed through major support during the day, and that does show a bit of strength in the Japanese yen against multiple currencies, so it has a bit of a “knock on effect” over here.
All things being equal, I think that we continue to go back and forth and simply trying to find some type of catalyst to get moving. Over the next couple of days, I anticipate that we will simply bounce around these two moving averages on the chart, the 50 and the 200 day EMA indicators to offer short-term trading opportunities at best. Longer-term, it is very likely that we will eventually try to go higher but we need some type of good news involving Brexit before that truly happens.
The Euro rallied again early on Wednesday, reaching towards the 1.1850 level as the world awaits stimulus coming out of the United States. That being said, never underestimate the ability of politicians in the United States to disappoint people. We are currently testing a major selloff area and a region that has had a massive resistance in the past so do not be surprised if it shows the same thing again. Because of this, I do believe that it is only a matter of time before sellers come back in, because quite frankly we would need to see something pretty impressive to break through the 1.20 level above.
EUR/USD Video 22.10.20
This does not mean that we cannot rally from here, nor does it mean that I am anticipating some type of major meltdown. What it does mean is that we are getting a bit stretched at this point and a pullback makes quite a bit of sense. The 1.17 level underneath would be an interesting support level to pay attention to, and clearly an area that the market has been interested in previously. Because of this, it makes a nice target for those looking to fade the oversold conditions.
As far as buying is concerned, it is probably a bit late to do that at this point, simply because of all of the obvious pressure on the Euro just above. With that in mind, if you are a short-term trader you may be looking for the pullback to profit from, otherwise you need some type of support of candle underneath the start going long again.
The Australian dollar has rallied during the trading session on Wednesday to break above the 0.71 handle. Having said that, the market still has plenty of noise around this area to continue to keep the market on its toes. I believe that we are essentially going to bounce around as we await to see what happens with stimulus coming out of the RBA, and of course global growth. Beyond that, and interest-rate cut coming out of Canberra will put downward pressure on the Aussie dollar, and as long as the Americans are still petering around with the idea of stimulus, until that comes the US dollar might be stronger than people anticipated.
AUD/USD Video 22.10.20
To the upside, we have the 50 day EMA but right now I am essentially looking at this as a market that is trying to bounce around between the 0.70 level on the bottom and the 0.71 level on the top. The market has been very choppy and noisy over the last month or so, as we are trying to figure out whether or not the global economy goes back to normal. The pandemic numbers are starting to climb in various places around the world, so that of course has people wondering whether or not there is going to be any significant growth over the longer term. If that does in fact become a problem, it is almost certainly negative for the Aussie dollar longer term. The meantime though, it looks like we are probably ready to simply dance back and forth in order to try to figure out where we go next.
For a look at all of today’s economic events, check out our economic calendar.
U.S. Dollar Loses Ground Against Australian Dollar
AUD/USD is trying to settle above the nearest resistance level at 0.7075 as the U.S. dollar is losing ground against a broad basket of currencies.
The U.S. Dollar Index gained strong downside momentum amid hopes for a new U.S. stimulus package. Negotiations between Republicans and Democrats continue, and the market believes that they will be able to reach a compromise deal by the end of the week.
This optimism puts pressure on safe haven assets like the U.S. dollar. The U.S. Dollar Index has just managed to get below the nearest support level at 92.80 and is moving towards the next support at 92.50.
If the U.S. Dollar Index settles below the support at 92.50, it will head towards the next support at 92.15 which will be bullish for AUD/USD.
Today, Australia reported that Westpac Leading Index increased by 0.2% month-over-month in September, suggesting that the recovery of the Australian economy continued.
Australia has been successful in containing the coronavirus pandemic compared to other developed economies so it’s not surprising that its economy continues to rebound after the blow dealt by the virus.
AUD/USD gained upside momentum and is trying to settle above the resistance at 0.7075. If this attempt is successful, AUD/USD will move towards the test of the next resistance level at 0.7100.
This resistance level has been tested during the recent trading sessions and proved its strength. In case AUD/USD manages to settle above 0.7100, it will gain upside momentum and head towards the next resistance at the 20 EMA at 0.7130.
A move above the resistance at the 20 EMA will push AUD/USD towards the next resistance near the 50 EMA at 0.7150.
On the support side, a move below 0.7075 will open the way to the test of the next support level at the recent lows at 0.7030. If AUD/USD manages to get below the support at 0.7030, it will gain additional downside momentum and head towards the next support at September lows near 0.7000.
EUR/USD gained strong upside momentum and is trying to get to the test of the resistance at 1.1870 as the U.S. dollar is losing ground against a broad basket of currencies.
The U.S. Dollar Index is currently testing the nearest support level at 92.80 amid optimism about the U.S. stimulus deal. In case the U.S. Dollar Index manages to settle below the support at 92.80, it will gain additional downside momentum and decline towards 92.50 which will be bullish for EUR/USD.
There are no important economic reports scheduled to be released today in the U.S. and EU so traders will focus on U.S. stimulus negotiations and developments on the Brexit front, although the first days of this week brought no news about negotiations between EU and UK.
U.S. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi have moved closer to a compromise, providing support to riskier assets and putting pressure on the American currency.
Currently, the market believes that Mnuchin and Pelosi will be able to negotiate a deal by the end of this week. If negotiations stall, the U.S. dollar will get a boost which will be bearish for EUR/USD.
EUR/USD has managed to get above the resistance at 1.1830 and is trying to settle above the next resistance level at 1.1870. If this attempt is successful, EUR/USD will head towards the major resistance level at 1.1910.
A move above 1.1910 will signal that EUR/USD will try to develop a new upside trend after several months of mostly range-bound trading action. In this case, EUR/USD will move towards the next resistance level at 1.1965.
In case EUR/USD settles above the resistance at 1.1965, it will get to the test of the psychologically important resistance level at 1.2000.
On the support side, the previous resistance at 1.1830 will likely serve as the first support level for EUR/USD. If EUR/USD declines below this support level, it will gain downside momentum and head towards the next support at 1.1780. A move below 1.1780 will open the way to the test of the major support level at 1.1750.
GBP/USD is moving towards the test of the nearest resistance at 1.3000 as the U.S. dollar continues to lose ground against a broad basket of currencies.
The U.S. Dollar Index has managed to get below the support at 93 and is heading towards the support at 92.80. If the U.S. Dollar Index moves below the support at 92.80, it will head towards 92.50 which will be bullish for GBP/USD.
UK has just provided inflation data for September. Inflation Rate increased by 0.5% year-over-year, fully in line with the analyst consensus. On a month-over-month basis, Inflation Rate grew by 0.4%.
Meanwhile, Core Inflation Rate increased by 0.6% compared to analyst consensus which called for growth of 1.3%. The softness of Core Inflation Rate will likely attract Bank of England’s attention.
At this point, there are no additional developments on the Brexit front. However, the market believes that EU and UK will ultimately reach a deal, and this optimism is pushing GBP/USD higher.
GBP/USD gained material upside momentum and is heading towards the resistance at 1.3000. GBP/USD has mostly ignored this level in previous trading sessions but it may still face some resistance at 1.3000.
If GBP/USD manages to get above 1.3000, it will head towards the next resistance level at 1.3030. RSI is in the moderate territory so there is plenty of room to gain upside momentum in case the right catalysts emerge.
A move above 1.3030 will push GBP/USD towards October highs near 1.3070. Most likely, GBP/USD will need additional catalysts to settle above this resistance level. If GBP/USD moves above October highs, it will gain upside momentum and move towards the next resistance level at 1.3110.
On the support side, the previous resistance level at the 50 EMA at 1.2950 will likely serve as the first support level for GBP/USD. In case GBP/USD manages to settle below this level, it will gain downside momentum and decline towards the next support level at 1.2890. A move below 1.2890 will signal that GBP/USD is ready to develop a new downside trend.