The British pound most certainly is a bit oversold during the trading session on Wednesday, and it appears that we are trying to form some type of base in order to rectify that. However, it’s very difficult to imagine a scenario where we should be buying this market because of the major breakdown that we had witnessed on Tuesday. After all, it’s not every day that you form a long and negative candle stick that slices through a large, round, psychologically significant figure like 1.25 above.
GBP/USD Video 18.07.19
At this point, any bounce that we see should be thought of as a selling opportunity, but obviously traded with a bit of caution as the Sterling has been a major disappointment this year. Quite frankly, the easiest way to trade this pair is the wait for some type of bounce that you can sell, and therefore take advantage of the “cheap US dollar”, as traders will be looking towards selling at the first signs of strength. Longer-term trend analysis suggests that we could go as low as 1.2250, maybe even 1.20 after that.
I see resistance at the 1.25 handle, the 1.2550 level, and the 1.2750 level. Quite frankly, it’s not until we break above the last level that I would consider buying this pair, which is a long way from here. The pair continues to suffer at the hands of the Brexit and the uncertainty, and I just don’t see that changing anytime soon. Think of it this way: even with the Federal Reserve ready to cut interest rates, the British pound continues to fall against the greenback.
This article was originally posted on FX Empire
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