The GBPUSD is trading at the level last seen in 1984/85. Short time?

Since my last update, the GBP is down 10% against the USD, bringing the price back to levels last traded in 1984/1985.

Why is this happening? We can all speculate and try to find meaning. What matters is that it happens, and as investors/traders we want to position ourselves to take advantage of it.

How important is this weakness from a technical analysis perspective? Very!

Below I have the monthly calendar.

The weakness since May has seen the price break through the following levels:

The low of October 2016, which had previously held firm and caused a 20% rise. The large round number of 1.2000, which has served as support since 2016. The March 2020 low peak following CV19 which caused a 25% bullish reversal.

The bigger picture is that the 22% drop from last year's high has removed the price from seven years of consolidation.

If this pattern holds, we can expect the price to plummet towards the 1985 low of 0.8000.

In such a case, short sellers, especially those who know how to hold and compound, would be rewarded with an extremely profitable period ahead.

My position for now is to wait for further weakness and confirmation of a continuation of the downtrend.

Why? Jumping now leaves me open to a false breakout where price triggers me into a position but reverts to long-term consolidation. False blowouts are commonplace. The consequence is a loss that could easily be avoided with a little patience.

By being patient, I reduce the chances of entering a false breakout and increase the likelihood of entering a downtrend.

I will then deal with further breakouts to accelerate the profit phase.

I have a short position triggered on EURUSD, which I will inform you about in my next article.

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