The British pound initially pulled back a bit during the trading session on Wednesday, breaking through the 50 day EMA before turning around to form a bit of a hammer. That hammer of course is a bullish sign, and it looks as if we are going to try to break through that small gap on Monday and continue to go higher. While the British numbers were less than impressive during the trading session on Wednesday, the reality is that people are looking for some type of clarity when it comes to Brexit and it’s likely that will be the biggest driver of this market.
GBP/USD Video 16.01.20
At this point, the market is likely to continue to look at the bullish flag of previous trading as massive support. I think that support extends down to the 1.28 level, and therefore I have no interest in shorting this market although I recognize we could have a bit of a pullback, at the end of the day is very likely that we will continue to see buyers coming in to pick up a bit of value. That being the case, the market should continue to try to reach towards the higher levels. The 1.35 level will be the target longer-term, and I believe at this point it’s very likely that the volatility will continue. If we were to turn around a break down below the 1.28 level though, that would be extraordinarily negative and send this market looking towards the 200 day EMA pictured in black near the 1.27 handle. At this point, proper position sizing will be crucial.
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This article was originally posted on FX Empire
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