UK retail sales came out worse than expected and British Pound fell against US dollar below yesterday low. There was some bearish momentum before the release came out and it strengthened after the data was published. Now, did that change market sentiment? I don’t think so, The fact that gbp/usd went below support 2 level (see the chart below) does not mean Pound strength has been exhausted. No! On the contrary, current levels could be a good point to buy the currency and keep it till it goes above 1.5700 level and beyond. I am waiting for some signs of turnaround to enter a long position.
Of course, you can never be sure whether accumulation or distribution is taking place when the pair goes below or above some key level. That’s why patient waiting is the key. I would want some 90-120 minutes to pass to be convinced of what is happening. If price just keeps on falling I would not buy, but if I see it stop from falling and jumping up and down in the area of 20 pips I would consider entering a long position. It might happen around US session or some half an hour before it begins.