The British pound rallied significantly during the week, breaking above the top of the previous week’s candle, and reached towards the 1.25 handle. That’s an area that was previous support, and now should be significant resistance. At this point it’s very likely that the market will probably start to sell off, reaching down towards the 1.2250 level after that. Ultimately, this is a market that is still held hostage to the Brexit, so at this point I anticipate that it’s only a matter of time before the British pound gets sold off.
GBP/USD Video 16.09.19
If we were to break out to the upside there is a lot of resistance all the way to the 1.27 level and therefore I think it’s only a matter time before we would see sellers jump in. If the Brexit gets worse, and let’s be honest here, it could, then that could be the next catalyst for this market to move. Alternately, if we can break above the 1.27 level then it opens the door to the 1.30 level but is very unlikely to happen without some type of movement with the Brexit. There has been a nice bounce, but quite frankly we have gone too far into short amount of time, especially when you look at the daily chart. This is a market that is still very much in a downtrend, and therefore it should not be ignored that the sellers should continue to go to the downside. If we were to break down from here and sliced through the 1.20 level things could get rather ugly.
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This article was originally posted on FX Empire
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