The British pound has initially tried to rally during the trading session on Friday but found way too much in the way of resistance above the 1.25 level as expected. It is also the 38.2% Fibonacci retracement level which of course is an area that will attract a certain amount of attention, and therefore it’s likely that we will continue to see a lot of bearish pressure eventually. In fact, on shorter-term charts you could even make an argument for a little bit of a “rising wedge”, which is a negative sign.
GBP/USD Video 23.09.19
To the downside I anticipate that the 1.23 level will offer the first amount of significant support, and then if we were to break down below there it’s possible that we could go down to the 1.20 level after that. All things being equal that offers a nice longer-term trade, but don’t expect the pair to simply break down and shoot towards that level. We will need headline catalysts such as the Brexit going wrong, which is something that seems redundant, and then we can start to pick up a little bit of momentum. Obviously, the exact opposite can happen but I am not convinced of a change in trend until we get a daily close above the 200 day EMA, which signifies a bullish run for longer-term algorithmic traders and trend traders. All things being equal, I do expect this market to rollover and continue to sell off but it is probably going to be more of a grind than anything else.
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This article was originally posted on FX Empire
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