The British pound broke down a bit during the trading session on Tuesday to kick off the day but then turned around to show signs of life again. That’s an interesting turn of events as we continue to see buyers near the 1.20 level. That’s a large, round, structurally important and even psychologically important figure. I think it makes a lot of sense that people would buying the British pound from that general vicinity, but I also believe that will get broken, and we could go much lower. After all, we have the Brexit going on and there isn’t much in the way of clarity when it comes to that situation. Quite frankly, I think that traders are starting to think about the “no deal Brexit” structural scenario. That should lead to lower British pound pricing before we get the final “flush lower.”
GBP/USD Video 14.08.19
At this point, there is a significant consolidation area just above, starting at the 1.21 handle and ending at the 1.22 handle. I think that there will be a significant amount of resistance in that area, so I do think that it’s only a matter of time before we start selling again. However, if we were to break above that level it’s likely that the market could go to the 1.2350 level, which is the beginning of resistance all the way to the 1.25 handle. We also have the 50 day EMA slicing through that level which should cause a lot of resistance. Regardless what happens next, it’s very unlikely that I would be a buyer of the British pound anytime soon. I’m simply looking for signs of weakness.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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