The British pound has broken down significantly during the trading session on Monday to kick off the week, slicing through the 1.30 level. However, we are starting to see signs of support just below that area, as we have bounced from there previously. The question now is whether or not the market will continue to focus on the idea of a possible rate cut by the Bank of England, or if it will focus on the idea of the currency being cheap from the longer-term standpoint. I think there are a lot of reasons to think that this market will eventually bounce, but we may have a bit of volatility in the short term.
GBP/USD Video 14.01.20
The market seems to have a lot of support extending all the way down to at least the 1.28 level which was the bottom of a bullish flag. At this point, the market continues to be longer-term bullish, but the question is when can we find enough support? You will need to be cautious and probably jump into this position to the upside with small bits and pieces, perhaps building a core position.
Ultimately, this is a market that will offer an of value the people will be paying attention to it. At this point, the market still looks at the 1.35 level above as the ceiling, so we will probably struggle to break above there anytime soon. If we did though, it would show a major shift in value and should send this market much higher. All things being equal I am a buyer but I also recognize that we may have to do it at lower places.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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