The British pound rallied during the week, reaching towards the 1.3250 level, an area that has been important several times over. We also have agreed with the uptrend line, and that is a positive sign indeed. However, the previous candle on the weekly chart was a shooting star, so I think we need to break above that level to start going higher. That also coincides with a breakout of minor consolidation, so overall that should leave the British pound towards the 1.3650 level above. Adding more speculation to the idea of a strengthening British pound is that the stochastic oscillator is starting to cross in the oversold region.
Keep in mind that the 1.3650 level is the scene of the gap lower from the surprise vote to leave the European Union, so if we were to break out and above that level, it would be a monumental shift in attitude. I believe that the uptrend line should be paid attention to, and the 1.30 level underneath is also an area that needs to be paid attention to. Those areas should hold, and if they do we should have buyers flood into the market. However, if they were to break this market underneath and below those levels, that could be a very negative sign, perhaps dropping this market significantly. At that point, it becomes more of a “sell and hold” marketplace.
In general, we are at historically low levels for the British pound, so I believe that larger firms that tend to trade in less leverage are probably holding onto British pound, and therefore waiting for the larger move over the next several years. If you trade like a big firm, you trade with low leverage and simply invest, which I think is going on currently.
GBP/USD Video 13.11.17
This article was originally posted on FX Empire
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