The Schizo Level
Markets like certain levels. And for the GBP/USD, the 1.6500 level has had a particularly interesting effect on price action. Many call this level a psychological level. I’m call it the schizoprenic level where cable has no idea where to go when it reaches this level.
The chart illustrates the sideways chop that we have been forced to trade with and within for the past FOUR months! And it has been at this 1.6500 level that cable has been unable to pick a clear trend. Look at this chart! It’s HORRIBLE! Traders don’t want to see charts like this! There is literally no trend in this daily chart for months and months and months. Not only that, there is no clear direction where price is headed once we get to 1.65. Price has broken to the upside just to completely reverse. Price has broken to the downside just to completely reverse.
Today, we finally got a move to the downside completing the quarter to 1.6250. Fundamentally, we should continue moving to the downside. As long as we stay away from 1.65, we will have clear direction. We end up back there, that means 1) the market is confused and 2) GBP/USD is sure to act psycho again.
