The British pound initially pulled back during the trading session on Tuesday, reaching towards the 50 day EMA before turning around and showing signs of strength yet again. Looking at this chart, a pullback should be coming rather soon, but I would anticipate that the 1.25 level would offer some type of resistance or perhaps even a bit of a “ceiling” in this market. All things being equal it’s very likely that we will continue to see signs of exhaustion going forward. After all, the Brexit is still a massive overhang, because quite frankly nobody really knows how that’s going to play out.
GBP/USD Video 11.09.19
To the downside, if we were to break down below the 1.2250 level then I think the British pound would be free to go towards the bottom of the recent move, which is the 1.20 level. At this point in time, not only do I see the 1.25 level as resistance or the “ceiling” above, but I also recognize that it’s very likely the 200 day EMA will go racing towards that level, which of course would also offer a lot of resistance. All things being equal I think the one thing you can count on is a lot of volatility but that’s nothing new with the British pound. That being the case, you need to keep your position size relatively small but it is still a “sell the rallies” type of situation that this pair finds itself in.
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This article was originally posted on FX Empire
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