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Known as the "Black Knight" in trading circles, Andrei Pehar is a private fund manager, consultant to management, and a sought-after speaker, trainer, and coach for professional traders and individual investors alike. He's also founder and Sr. Currency Strategist at fxKnight.com.

His client list includes prestigious names such as UBS, Tower Asset Management (named by Bloomberg as top asset manager), Clifford Associates (investment counselors since 1915, officially acknowledged as the oldest in the United States), and several other high profile firms specializing in investment and wealth management for musical artists, sports celebrities, and other ultra high net worth individuals and trusts. He is the author of "Trading Forex for Living", published by Harriman House

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How Much Further Can the Pound Fall?

Posted 07:19 16 January 2009 | 1

The British Pound has been steadily declining against the US Dollar since reaching its high of 2.1160 in November of 2007.  Have we finally reached bottom, or are there further lows in store?

To answer that question, we would first need to see price break out of its current range between 1.4481 and 1.5564, a range which has effectively been in place since early November of 2008.

We currently find ourselves beneath a key Fibonacci level at 1.4738, and moving down quickly towards the weekly S1 pivot at 1.4547 - if this level holds as support, then we will likely see price move back to re-test 1.5136 as resistance.  If 1.4547 fails to stop the decline, then the next likely support is the weekly S2 pivot at 1.4016

Longer-term, if we continue to trade below the Fib at 1.5136 (and especially if we break the bottom end of the range at 1.4481), we could potentially see price drop as low as 1.3064

If there are signs of recovery (either due to a turn-around in the UK real estate market, a halt to the series of interest rate cuts by the Bank of England, or a sudden drop in the demand for the US Dollar), we would need to see this pair first get back above 1.4738 (and hold that level as support), in order to once again target the top side of the range at 1.5564, and if that breaks the next Fib level above at 1.5772.

Comments (1)

That's bad really bad, most for the people who's really counting on the increase of the pound. But things change, nothing is a constant.
kimpalma | Posted 13:38 28 January 2009

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