I mentioned last week that 1.6425 was a critical level because if the price of the GBP/USD pair closed below this level on any one day, the Supertrend indicator would turn red and possibly signal the start of a new bearish trend. Well this is exactly what happened yesterday and I think it could be highly significant.
This indicator has been green, ie bullish, since 24th March when the price was around 1.45 and has been rising ever since, along with the price. Therefore this trend has been in place for a very long time, which is why I think it's significant. What it does mean is that I shall be automatically looking for short positions on the 4 hour chart for this pair in accordance with my own particular trading rules.
So if the price is set to fall what kind of price targets should we be looking at?