The British pound initially tried to rally a bit during the trading session on Monday but found enough resistance near the 1.22 level to sell off yet again. One thing is for sure, the British pound continues to show signs of weakness as we can’t get some type of agreement between the British politicians to get some type of movement. Ultimately, it looks as if we are coming closer to a “no deal Brexit”, and for anybody who has been following this situation, that should be your default thesis. If that’s going to be the case, we will get a massive “flush lower” in the British pound at one point or another, which could be the antithesis of a “blow off top.” In other words, someday were going to get an opportunity to buy the British pound at such cheap levels that it will be the “trade of the century.” However, we aren’t quite there yet.
GBP/USD Video 20.08.19
With the deadline of October 31 coming, I suspect the closer we get to that day the more likely we are to see that move, so that’s something to keep in the back of your mind. Rallies at this point are to be faded, and right now it looks like the 1.22 level is going to be your “ceiling” in this pair, followed by the 50 day EMA. Overall, I like the idea of fading candlesticks that show signs of exhaustion, particularly on short-term charts as the trend has been so reliable.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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