The British pound initially tried to rally during the trading session on Tuesday but gave back the gains and fell towards the 1.30 level underneath. That is a large, round, psychologically significant figure that a lot of people will pay attention to, so therefore it is not a huge surprise to see that we have bounced from there on Monday, and on Tuesday it looks like we are trying to do the same. However, the question now is whether or not the 1.30 level holds, or if it does not. If we rally from the 1.30 level again, it is very likely that we will continue to consolidate in this general region.
GBP/USD Video 05.08.20
If we break down below the 1.30 level, then it is likely that the market will go looking towards 1.2750 level underneath, which is the beginning of the massive area of support that extends down to the 1.2650 level. All things being equal, believe that this market will probably go looking towards the 1.30 level yet again on a bounce. I do believe that even if we break down from here it is likely that we will simply get an opportunity to buy the British pound at a cheaper price.
I have no interest in shorting this market, so if we do break down, I will simply look for a buying opportunity based upon value more than anything else. We have obviously seen a huge push to the upside, and therefore I think we have some follow-through coming relatively soon. If we break above the candlestick on the Friday session, then it would kick off the next leg higher, perhaps reaching towards 1.35 handle.
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This article was originally posted on FX Empire
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