The British pound has gone back and forth during the trading session on Friday, as we had seen a hammer form during the previous session as well. That of course is a good sign, because it shows that the market is trying to stabilize. The 50 day EMA offering support is a strong sign as well, and quite frankly I think at this point a lot of what you are going to see is going to be noisy behavior. I do like the idea of buying pullbacks, as the market will try to build up enough momentum to go much higher.
GBP/USD Video 13.01.20
You can see clearly that there is a bullish flag from previous trading that is offering a bit of support, so it does make sense that it would offer a lot of buying pressure. After all, there are a lot of orders in that area where we ended up forming that bullish flag, so unless we get some type of horrifically negative sign coming out of the Brexit situation, it’s likely that this market will continue to find an of buyers underneath the finely look towards the 1.35 handle.
Having said that, it’s very likely that we are going to continue seeing support all the way down to the 1.28 handle which is the bottom of that bullish flag. If we were to somehow break down below there, it would throw the entire uptrend into doubt. That being said though, we are starting to see a lot of upward momentum being built on short-term charts. Buying on the dips should continue to work, but if we were to break down below the 1.28 handle, you would have to bail out on any longer term scenario.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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